Etihad CEO says deal will make Alitalia 'more secure'

Tie-up between carriers aimed at expanding routes

(ANSA) - Rome, August 8 - After months of intense negotiations, Friday's deal that will see Etihad Airways take a 49% stake in money-losing Alitalia will help to make the Italian carrier more secure, said Etihad Chief Executive Officer James Hogan. Abu Dhabi-based Etihad will invest an estimated 560 million euros in struggling Alitalia in a deal that is expected to keep the Italian carrier alive while providing Etihad with greater access to lucrative routes in Europe.

Hogan also pledged to invest as much as 1.758 billion euros in restructuring the Italian carrier over the coming years, adding he expects Alitalia should be profitable by 2017. "Our entry into Alitalia is to be partners," Hogan said after the pact was formally signed Friday by chief executive officers of the two airlines. "There will be a secure future," added Hogan. "We will work together to make something that people can be proud of". The deal was inked followed the 11th-hour elimination of final stumbling blocks in the aviation tie-up including a labour offer that led the only major trade union opposed to the deal to drop its opposition. Then, Alitalia shareholders approved a 300-million euro capital increase essential to smooth the transition until the tie-up is fully implemented.

The deal is an "excellent outcome," said Gabriele Del Torchio, Alitalia's chief executive officer. Transport Minister Maurizio Lupi has said the deal with Etihad was essential to keep Alitalia alive. Friday, he sounded triumphant. "We did it, we have believed for eight months in this deal, in the face of those who did not believe it," said Lupi. Regulatory hurdles still lie ahead.

The deal must now be approved by European regulators who will be checking closely for possible State aid, which has been alleged in the past by air industry competitors. The large stake to be taken by Etihad had triggered concerns with the European Commission, which warned Italian authorities to ensure the United Arab Emirates-owned carrier does not gain a majority holding in Alitalia. EC rules require that majority ownership of European airlines remain in European hands, and the Italian government has reassured the EC that those rules were being obeyed. Hogan said he had high hopes for Alitalia's future. "To me, the sexiest airline in Europe should be Alitalia".