EU Commission Clears Etihad’s 49% Buy Of Italian Airline Alitalia

Etihad Airways secured European Union approval on Friday to acquire 49 per cent of loss-making Italian airline Alitalia, the latest in a series of acquisitions made by the Abu Dhabi-based airline to expand its network around the world.

The deal is part of a 1.76-billion-euro rescue plan for Alitalia, which doubled its net loss to 569 million euros last year, providing it with funds to invest in more profitable long-haul routes and reduce its dependence on domestic and regional services where it faces fierce competition from low-cost airlines and high-speed trains.

For Etihad, which already has minority stakes in Air Berlin, Aer Lingus, Virgin Australia, Air Serbia and Swiss-based regional carrier Darwin Airline, the deal will reinforce its presence in Europe’s fourth-largest travel market with 25 million passengers.

To secure approval Etihad and Alitalia agreed to give up airport slots on the Rome-Belgrade route as Alitalia and Air Serbia, are the only carriers offering direct flights on that route.

“The Commission had concerns that the monopoly created by the transaction on the Rome-Belgrade route could lead to higher prices and a loss of service quality for passengers,” the European Commission said in a statement.

“These commitments adequately address the competition concerns identified by the Commission and should facilitate new entry on the Rome-Belgrade route,” the Commission said.

Reuters reported on Nov. 12 that the deal would be cleared with conditions, and that the Commission’s transport unit would also give the green light by the end of the year because it complies with rules on EU majority ownership on EU airlines.