Alitalia-Etihad deal finalized, to be signed Friday

As airport ground crews continue labor action

(ANSA) - Rome, August 7 - The deal that will see Abu Dhabi-based Etihad Airways buy a 49% stake in Italian carrier Alitalia is closed and will be formally signed Friday afternoon, Transportation Minister Maurizio Lupi said Thursday.

He spoke at the end of meetings in Premier Matteo Renzi's office with Etihad CEO James Hogan and senior government officials. "Good work has been done," said Lupi, adding that final details will be worked out during the day ahead of Friday's formal sign-off on the deal that will see Etihad invest 560 million euros in Alitalia. "It's an injection of confidence for the country, after yesterday's data," he added, referring to statistics Wednesday that showed Italy has returned to recession, its third in five years. The imminent deal proves "there are those who still believe in our country," the minister said.

Final negotiations in recent days have aimed at settling outstanding issues, including an agreement from Italy's State postal company Poste Italiane - one of the airline's largest shareholders - to invest 75 million euros in Alitalia through a special entity. Poste Italiane, which is currently one of Alitalia's biggest stakeholders after it acquired over 19% of the airline as part of a government-orchestrated bailout last year, had previously balked at any further investments in the money-losing airline without guarantees that it would not be on the hook for Alitalia's enormous debts, estimated by some at more than 800 million euros. As well, Alitalia's board agreed to formally recommend shareholders approve a 300-million-euro capital increase to keep the airline alive until the Etihad deal is fully implemented.

Labour conditions have been a major stumbling block, as some unionized workers at Alitalia have balked at accepting Etihad's demands for some 2,000 job cuts and salary reductions even as the Italian government insisted throughout negotiations that the deal is essential to keeping Alitalia alive.

Most unions representing Alitalia workers have accepted Etihad's demands, and in some cases other positions have been offered to try to cushion the blow. But one union has called for a renegotiation of the pact, which also demands cuts to wages for Alitalia workers than remain after the Etihad deal.

Alitalia has said that all its unions must support the Etihad deal before it can be finalized. Later on Thursday, Transport Minister Maurizio Lupi said the government will help 950 permanently laid-off Alitalia staff find other jobs. "They will have welfare, and they will be helped to locate other employment," Lupi said. "There will be plenty of job opportunities for everyone, either at Fiumicino or (Milan's) Malpensa airports". The job cuts have already been agreed upon by 80% of Alitalia unions, the minister added. Also on Thursday, the carrier warned the national strike authority that possible mass absenteeism by its staff could wreak havoc at Rome's Fiumicino airport at the weekend.

The warning came as Alitalia struggled to return thousands of suitcases to passengers after a wildcat go-slow by baggage handlers' against planned job cuts plunged the national carrier's luggage service into chaos. Lupi swiftly condemned the announced action. "This could paralyze Fiumicino…it would be unacceptable and intolerable," he said.