Etihad to fly to the rescue of Alitalia

Further information has emerged today regarding a deal first mooted back late last year, when talks began between Etihad, the United Arab Emirates based airline and Alitalia, the perennially struggling Italian national airline with regard to a potential investment by Etihad into the Italian national flag carrier.

According to a statement released today by Alitalia CEO Gabriele Del Torchioy, Etihad could invest up to EUR 560m in return for a 49 per cent stake in the ailing company. This would be a substantial boost to Alitalia, which has struggled to be competitive for a number of years and found a proposed restructuring by the Italian government in the autumn of 2013 to not be to the liking of Air France-KLM, another major investor.

Etihad are no strangers to investing in airlines based outside of the Emirates; the company already holds small stakes in Aer Lingus, Air Berlin and India's Jet Airways, although total control of any European airline would remain out of their reach given that the EU mandates that the majority of shares of EU airlines must remain in European hands.

According to the press reports, should the deal proceed, Ethiad are likely to insist on significant job cuts in return for their investment, which could be the biggest stumbling block for the heavily unionised Alitalia.