(MENAFN - Khaleej Times) Alitalia board of directors gives mandate to make etihad top shareholder
alitalia is expected to strike an ‘eminent stake deal’ with etihad airways soon as its board has cleared the rescue plan submitted by gulf airline to turnaround the italy’s flagship carrier by 2017.
the airline’s board of directors which met on friday said they would seek to secure a final deal to make etihad airways top shareholder in alitalia by acquiring 49 per cent stake in the airline according to media reports.
“the board has allowed alitalia president roberto colaninno and chief executive gabriele del torchio to continue negotiations for the drafting of a definitive agreement with the uae company” the airline’s board said in a statement.
italian government which terms the airlines as a strategic asset has welcomed the move. transport minister maurizio lupi who has been deeply involved in the case welcomed the announcement on social media and expressed his hope to conclude the deal quickly.
“the airline’s board gives a mandate to close (negotiations) with etihad. good! italy is again attracting foreign capital. now forward swiftly!” the minister tweeted.
etihad airways has been negotiating since december to buy up to 49 per cent stakes in alitalia which is facing bankruptcy if a deal is not finalised till august. the italian flaf carrier was kept afloat by a government-engineered 680 million rescue package last year but risks having to ground its planes unless it strikes a deal with etihad airways for investment in long-haul routes and planes.
“etihad which already has stakes in airberlin and aer lingus is looking to invest more than 682 illion in exchange for a 49 per cent stake in alitalia sources close to the talks have said. however negotiations did not move forward due to differences over alitalia’s heavy debt and proposed job cuts of up to 2500 to revitalise the troubled airline.
according to italian media the issue of debt had still not been discussed after a meeting between the banks and the italian government on thursday. the banks have already expressed their basic support to etihad’s rescue plan sources close to the talks have said although details of the debt restructuring still need to be defined.
options proposed include the banks writing off parts of the debt and converting the remainder into equity. unions also need to agree to proposed job cuts which italy’s labour minister giuliano poletti said this week could be as high as 2500 almost a fifth of the total workforce. part of the cuts would be covered by state-sponsored layoff schemes. unions are expected to meet on june 12.
alitalia’s board “expressed appreciation” for etihad’s proposals which include plans to make the italian carrier profitable by 2017. the board will again meet on june 13 to approve the company’s long-delayed financial results for last year. in 2012 the company reported a net loss of €280 million.
italy’s flagship carrier is expected to run out of cash by august sources said adding that the company italy’s government and unions have little choice but to accept a deal on etihad’s terms.
etihad still needs to secure an agreement with alitalia’s creditors mainly italy’s top two lenders intesa sanpaolo and unicredit on how to restructure around €700 million of the debt.