Etihad on the hunt – again

by ORIENT AVIATION 

February 1st 2014

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The Gulf roller coaster is showing no signs of slowing down with Etihad Airways reported to be interested in troubled Italian carrier, Alitalia. The Abu Dhabi-based airline declined to comment on the matter after the recent reports of the negotiations. Instead, it announced code-shares with Greece’s largest operator, Aegean Airlines, and Latvia’s airBaltic. Read More »

The potential deals, if they become reality, will intensify competition for international carriers flying out of Australasia. Australia has a large population of citizens with Italian, Greek and Eastern European heritage. Links with Italian and Greek airlines, in particular, will allow Etihad to feed its passengers into the extensive European networks of these airlines.

Aegean will start four times a week services between Athens and Abu Dhabi next month, with the code share agreement allowing Etihad to place its EY flight code on Aegean’s services from Abu Dhabi, but also on 16 other Greek destinations and 10 cities across Europe operated by Aegean. The new tie-ups would add to Etihad’s already significant European reach from existing equity partners, airberlin, Aer Lingus and Air Serbia.

Reports claim Etihad is aiming for a 49% equity in Alitalia, for US$478 million. The fragile Italian carrier has been searching for a new partner since Air France-KLM let its shareholding shrink from 25% to 7%. Air France-KLM also declined to participate in a US$410 million capital raising. Alitalia subsequently raised US$307 million from other shareholders and credits. It will also receive a US$102 million investment from Poste Italiane.

Alitalia’s creditors, UniCredit and Intesa Sanpaolo, are reported to be preparing to extend an additional credit line of US$273 million to the Rome-based carrier. Analysts calculate the new fund injection will secure Alitalia’s future at least for this year. Its long-term future is dependent on finding a partner. Since privatizing in 2008, Alitalia has struggled to compete with low-cost carriers, contain its high staff costs, improve productivity and reduce debt.