Rechtsanwältin, Senior Associate
Out-Law News | 11 Aug 2014 | 2:46 pm | 2 min. read
Etihad, which is investing €560 million of the total, said the deal would “build a reinvigorated Alitalia as a competitive, sustainably profitable business”.
Other equity investment of €300m will be made in Alitalia by its existing core shareholders, including Intesa San Paolo (€88m), Poste Italiane (€75m), UniCredit (€63.5m), Atlantia (€51m), IMMSI (€10m), Pirelli (€10m) and Gavio (€2.5m).
Additionally, up to €598m in financial restructuring of short and medium term debt has been provided by financial institutions and existing bank shareholders, Etihad said. A total of €300m of new loan facilities have also been extended by Italian financial institutions.
The transaction is expected to be completed on 31 December 2014, subject to various regulatory approvals.
Etihad’s investment includes the purchase of five pairs of slots at London’s Heathrow Airport, valued at €60m. Etihad said the slot pairs will be leased back to Alitalia “on an arm’s length basis”.
According to Etihad, the “recapitalised Italian national airline will now be able to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalised brand, and a greater focus on Italian tourism and trade promotion”.
Etihad’s president and chief executive officer James Hogan said: “For Etihad Airways, this is a strategic, long-term commercial investment. We believe in Alitalia. It is great brand with enormous potential.”
Hogan said: “With the right level of capitalisation and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again. However, ultimately it has to work as a business and the goal is for sustainable profitability from 2017.”
Etihad said that while “maintaining the relevance of short-haul routes, the proposed network plan focuses on the profitable growth of long-haul flying from both Rome Fiumicino and Milan Malpensa”. Etihad said this will include flights to new destinations, increased frequency in certain existing markets and an enhanced network to Abu Dhabi “to capitalise on growing traffic between Italy and the UAE, and provide Alitalia’s passengers with seamless connectivity to Etihad Airways’ global network”.
From the summer of 2015, Alitalia will also begin to implement connections between other Italian cities and Abu Dhabi, with plans for direct flights from markets such as Venice, Catania and Bologna.
Etihad said: “Rome Fiumicino will emerge as a larger European intercontinental hub, with up to five new routes over the next four years, while long-haul flights from Milan Malpensa will more than double to 25 flights a week by 2018. Alitalia’s wide body fleet is planned to grow by a third, while its narrow body fleet will be right-sized to meet the requirements of the new network plan.”
Etihad said: “To better serve the Italian cargo market, which is the third largest in Europe, Alitalia’s cargo business will be relaunched and expanded, with the establishment of a centre of excellence in Northern Italy, investment in handling capabilities at Italian airports, and the optimisation of an integrated cargo network.”
Rechtsanwältin, Senior Associate