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 Italian Prime Minister Enrico Letta, in Abu Dhabi on a visit to
encourage investment in Italy, said he had high hopes for a deal and
is "flexible" over the possibility of a change in Alitalia's
management.
Alitalia and Etihad have been in talks for weeks on a possible
investment by the Gulf carrier, which sources close to the matter
say could involve Etihad buying a 40 percent stake for as much as
300 million euros ($404.6 million).
"I am very happy with the announcement; we have worked for this
outcome," Letta told reporters, though he declined to comment on the
size of Etihad's investment.
The two companies and their advisers will determine a common
strategy that meets the objectives of both parties in the next 30
days as they seek to move Alitalia to sustained profitability, the
joint Alitalia and Etihad statement said.
Alitalia offers access to Europe's fourth-largest travel market and
flies 25 million passengers a year, but it had net debt of more than
800 million euros at the end of last year and is losing 700,000
euros a day.
A tie-up with the Gulf carrier, however, could bring a vital source
of liquidity and the resources to invest in a new strategy focused
on long-haul routes.
Letta, whose fragile coalition government engineered a 500 million
euro emergency rescue to keep Alitalia flying while it searched for
partners, has much at stake politically in the effort to save
Italy's historic flag carrier.
The airline employs 14,000 people and is regarded as a strategic
national asset.
"We are very much flexible in the discussions because we know we can
trust Alitalia and Etihad. They know the business," Letta said when
asked if a deal could lead to a change in Alitalia's management.
"IMPORTANT STEP"
Alitalia Chief Executive Gabriele Del Torchio described Sunday's
announcement as "an important step in creating a solid and
competitive Alitalia".
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The head of Italy's main employers' lobby Confindustria also
welcomed the news. "A strategic alliance with a strong group that is
willing to invest and doesn't sideline our country is a positive
development," Giorgio Squinzi said.
Alitalia successfully completed a 300 million euro capital hike
in December, which analysts said would keep it flying for six
months. But a decision by its former top shareholder and partner Air
France <AIRF.PA> not to subscribe to the emergency cash call left
the Italian carrier searching for another partner to help revive its
fortunes.
For Etihad, a stake in Alitalia would further its effort to expand
its global reach through strategic holdings in other airlines. It
has already bought minority stakes in several carriers, including
Air Berlin <AB1.DE>, Virgin Australia <VAH.AX> and Aer Lingus <AERL.I>.
Alitalia has promised to avoid permanent job cuts as part of a
restructuring presented to labor unions in December, though the
airline has said it needs to save 128 million euros in labor costs,
equivalent to 1,900 job cuts.
At a meeting with labor unions on Saturday, Alitalia agreed to use
so-called "solidarity contracts", whereby people work less and are
paid less, rather than a more controversial temporary layoff scheme.
($1 = 0.7415 euros)
(Additional reporting by Praveen Menon,
Isla Binnie, Regan Doherty and Gavin Jones; editing by Catherine
Evans and David Goodman)
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