Alitalia Still not yet in the Etihad Camp

Alitalia’s much spoken of part takeover by Etihad Airways seems to be still hanging in the balance and will it seems be decided this week as to whether it will go through or not after a planned meeting between AZ’s CEO, Gabriele Del Torchio and EY’s CEO, James Hogan.


            These men will decide on Alitalia’s future this week: AZ’s boss Del Torchio (left) and EY’s leader Hogan  /  sources: AZ, hs

Alitalia and its creditors are pushing to complete a proposal to finally persuade Etihad to invest. An option which seems to be on the table is to take out a considerable piece of Alitalia’s €800m debt into a separate company. This was apparently discussed last week in Milan among managers from AZ along with various Italian creditor banks which are said to include UniCredit and Intesa Sanpaolo.

The Italian flag carrier was privatized in 2008 with the aim of placing unprofitable parts of its business into a so called “bad company.“ Since privatization, the carrier has not made a profit and burns up to €1m per day in order to keep in the air.
An unbearable situation and one which brought the carrier to the brink of bankruptcy in 2013 before being bailed out once again by a cash injection organized by the Italian government.

Under the envisaged plan, AZ would become a holding company which would take on the majority of the carrier’s present debt. This would also mean that the business operation which includes the fleet and relevant airport slots would be held within the new company which in turn would be controlled by the holding company. Etihad would then be in a position for a direct investment of above €500m in the form of a capital increase, sources say.

The Abu Dhabi based carrier is still looking at acquiring 49 percent of Alitalia but is still refusing to take over all of the debt. On top of this Etihad seems to be still insistent on Alitalia shedding up to 3,000 staff from a total manpower of 14,000.

It seems that the “bad company“ idea is not going down well with creditor banks who tend to shirk away from such ideas of forming separate companies in order to absorb the bad debt.
Italian sources state that the remaining “good company“ would then see Etihad injecting €560m in aid with Italian investors adding a further €200 million.

Both carriers and UniCredit have so far refused to comment.
We continue to “wait and see“ in the hope that the story will have a happy ending.

John Mc Donagh