Alitalia and Etihad Finalize €1.758bn Investment Deal

Victoria
By Victoria August 8, 2014 16:15

Alitalia and Etihad Finalize €1.758bn Investment Deal

Alitalia and Etihad Airways have signed a transaction implementation agreement today (August 8th), in a deal that will see Etihad acquire a 49% stake in the Italian flag carrier.

Etihad will invest €560 million in Alitalia, becoming a minority shareholder with an additional €300 million committed by principal Alitalia shareholders Intesa San Paolo (€88m), Poste Italiane (€75m), UniCredit (€63.5m), Atlantia (€51m), IMMSI (€10m), Pirelli (€10m) and Gavio (€2.5m).

Up to €598 million in financial restructuring of short and medium term debt has been provided by Italian financial institutions, together with new loan facilities totalling €300 million, and the recapitalisation will allow Alitalia to invest in new routes and new branding with the stated objective of returning to sustained profit by 2017.

Etihad President and CEO James Hogan said: “For Etihad Airways, this is a strategic, long-term commercial investment. On completion, we are committed, with the other shareholders, to build a reinvigorated Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.

“We believe in Alitalia. It is great brand with enormous potential. With the right level of capitalisation and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again.

“Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalise the brand, the airline will increasingly embody all that we recognise as quintessentially Italian – the history, culture, food and fashion. It must be an airline of which Italians can be proud. However ultimately it has to work as a business and the goal is for sustainable profitability from 2017.”

Hogan added that he recognised that many steps had been taken by the current Alitalia shareholders, management and workers to stabilise the business ahead of new investment.

“Alitalia can succeed and it can grow again but it needs to build from solid foundations”, he said. “We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition.”

Alitalia CEO Gabriele Del Torchio said: “There is a long road ahead, first to complete the transaction and then to deliver this new vision. Today marks a critical step on that journey and we are proud to take our place as a strategic investor in the new Alitalia.

“This is an excellent outcome for Alitalia. We have had to take some tough decisions in a very robust negotiation process but we have achieved the consensus we require to create the right shape and size for Alitalia in the future. This investment will provide financial stability and enable us to position Alitalia, and the travel and tourism industry in Italy, for long-term growth.

“For this important result I’d like to thank all the Alitalia staff – men and women, managers and workers, pilots, crew and office staff – who have worked with passion and commitment for our new launch. The transition to a sustainable and profitable Alitalia has required tough decisions but we all share the conviction that this new beginning, oriented towards growth, will bring new opportunities for everyone.”

James Hogan also said: “The possibilities when we knit together our network with those of our existing equity partners, including airberlin, Air Serbia, Etihad Regional, Jet Airways, Virgin Australia, Air Seychelles and Aer Lingus, and of course our strategic codeshare partner, KLM-Air France, will provide the most compelling customer offering.”

The advisors on the transaction were – Etihad Airways: JP Morgan (financial); DLAPiper and Chiomenti (legal); PricewaterhouseCoopers (due diligence). Alitalia: Citi (financial); Bonelli Erede Pappalardo (legal).

Victoria
By Victoria August 8, 2014 16:15