Etihad Airways and Alitalia have signed the transaction implementation agreement which will result in a €1,758 million investment to build a reinvigorated Alitalia as a competitive, sustainably profitable business.
Etihad Airways invests €560 million in the Italian carrier, becoming a minority shareholder (subject to regulatory approval), with core Alitalia shareholders committing an additional €300 million. Additionally, up to €598 million in financial restructuring of short and medium term debt is provided by financial institutions and existing bank shareholders. €300 million new loan facilities are extended by Italian financial institutions.
Etihad Airways will take a 49 per cent shareholding in Alitalia, for an investment of €387.5 million. Its total investment also includes €112.5 million to acquire a 75 per cent 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 €60 million. The slot pairs will be leased back to Alitalia on an arm’s length basis. The transaction is due to be completed on 31 December 2014.
Etihad Airways President and Chief Executive Officer, James Hogan has the goal of sustainable profitability from 2017.
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.
Members of the MilleMiglia frequent flier program will be able to ‘earn and burn’ on Etihad Airways and partner airlines, with future integration of the programmes planned.