Etihad ‘needs a month’ to study Alitalia’s books

February 27, 2014 - 12:27:48 am

MILAN: Etihad Airways is expected to finish examining Alitalia’s books within a month as it ponders whether to invest in the loss-making Italian airline, Alitalia’s chief executive said yesterday. 

Alitalia has cut costs and refreshed its fleet since being rescued and privatised in 2008. But a focus on domestic and regional markets has left it vulnerable to competition from low-cost airlines and fast trains on the busy Milan-Rome route. 

A tie-up with Etihad could bring Alitalia the resources to invest in a new strategy focused on long-haul routes. Talks with the Gulf carrier intensified this month and sources close to the matter said Etihad could be interested in buying a stake of up to 40 percent in the company. 

“The due diligence should be concluded within three to four weeks,” Alitalia Chief Executive Gabriele Del Torchio said. He said he was “realistic” about the process and did not expect it to be easy, or to conclude quickly. 

Sources say Etihad wants a heavy restructuring of Alitalia’s debt and was also asking for job cuts at the Rome-based airline.

Del Torchio declined to comment on conditions Etihad might have put on the table, although he said he did not believe Alitalia’s staff headcount of 14,000 was a big problem. 

Etihad has said it will only invest in Alitalia if it fits in its network and if Alitalia has a credible plan to return to profit. The group has met Alitalia’s creditors in recent weeks. They include Italy’s two top lenders UniCredit and Intesa Sanpaolo, troubled Monte dei Paschi di Siena  and Banca Popolare di Sondrio.

The sources have said Etihad was asking the lenders to write off big parts of Alitalia’s debt. Other options were for banks to postpone repayments or convert debt to equity, they said. 

Disagreements over a debt restructuring already scuppered efforts by Alitalia to secure more capital from its shareholder Air France-KLM last year. 

Reuters

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