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Irish Guy Rescues Alitalia


Etihad Airways, led by James Hogan, has rescued Alitalia, the ailing Italian state airline, with a €388m investment that sees the Abu Dhabi airline acquire a 49% shareholding.


The recapitalised Italian national airline says it will now be able to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalized brand, and a greater focus on Italian tourism and trade promotion. 

Etihad Airways' total investment of €560m will be provided through a combination of equity injections, asset purchases and other financing facilities and funding arrangements to re-structure the airline's balance sheet. 

This is to be complemented by a further equity investment of €300m from existing core Alitalia 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.  €300m of new loan facilities have also been extended by Italian financial institutions.

Etihad Airways will take a 49% stake in Alitalia for an investment of €388m.  Its total investment also includes €113 m to acquire a 75% interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline's frequent flier programme, and the purchase by Etihad Airways of five pairs of slots at London's Heathrow Airport valued at €60m. The slot pairs will be leased back to Alitalia.

Completion of the equity investment remains subject to completion by Alitalia and its key private and public stakeholders of certain conditions precedent and is also subject to final regulatory approvals.

Etihad Airways CEO James Hogan (pictured seated, second from right) said: “For Etihad Airways, this is a strategic, long-term commercial investment. On completion we are committed with the other shareholders, to build a reinvigorated Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.

“We believe in Alitalia. It is great brand with enormous potential. 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.

“Alitalia can succeed and it can grow again but it needs to build from solid foundations.  We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition.

“The winners from this successful strategy will be Italian and international travellers, who will see better service, new routes and greater competitive choice; Alitalia's employees, who can look forward to a brighter future over the long term, in a business which will grow again; and the Italian people, who can be proud once again of their national airline.

“There is a long road ahead, first to complete the transaction and then to deliver this new vision.  Today marks a critical step on that journey and we are proud to take our place as a strategic investor in the new Alitalia.”

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.

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.

Starting from Winter 2014, Alitalia will increase frequency between Rome Fiumicino and Abu Dhabi from five per week to a daily service, and commence a new daily service between Milan Malpensa and Abu Dhabi.

This flying will complement Etihad Airways' existing daily services on these markets and open up a range of new connecting opportunities for passengers of both airlines.

From summer 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.

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 widebody fleet is planned to grow by a third, while its narrowbody fleet will be rightsized to meet the requirements of the new network plan.

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 optimization of an integrated cargo network.

James Hogan said: “Italy is a hugely important market for Etihad Airways, from both trade and tourism points of view. The UAE is Italy's top trading partner in the Middle East and North Africa region, and is home to more than 10,000 Italian citizens and 300 Italian companies.

“The possibilities when we knit together our network with those of our existing equity partners, including airberlin, Air Serbia, Etihad Regional, Jet Airways, Virgin Australia, Air Seychelles and Aer Lingus, and of course our strategic codeshare partner, KLM-Air France, will provide the most compelling customer offering.”

About Etihad Airways
Etihad Airways began operations in 2003, and in 2013 carried 11.5 million passengers. From its Abu Dhabi base Etihad Airways flies to 108 existing or announced passenger and cargo destinations in the Middle East, Africa, Europe, Asia, Australia and the Americas.

The airline has a fleet of 102 Airbus and Boeing aircraft, and more than 210 aircraft on firm order, including 71 Boeing 787s, 25 Boeing 777-X, 62 Airbus A350s and 10 Airbus A380s. Etihad Airways holds equity investments in airberlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways, and is in the process of formalising its equity investment in Swiss-based Etihad Regional.

About Alitalia
Alitalia - Compagnia Aerea Italiana (www.alitalia.com) is a fully private company that started its operations on 13 January 2009. The Company's 2014 summer schedule offers 103 destinations, of which 26 in Italy and 77 for the rest of the world, 186 routes and more than 4,700 weekly flights.

The company carried 24 million passengers in 2013. Alitalia is a member of the SkyTeam global alliance and, since 2010, forms part with Air France-KLM and Delta Air Lines of the main air transport Transatlantic Joint Venture. Today, the fleet of Alitalia is one of the youngest in the world with an average age of only seven years.

In 2013, for the fourth year in a row, Alitalia, has been recognized as the best airline in the world for the quality of its innovative onboard dining program in Magnifica Business Class.

The prize of “Best Airline Cuisine” has been awarded by the American magazine Global Traveler, which has been conducting research on the exceptional achievements of the travel and tourism industry for ten years. (August 2014)

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