MILAN: Etihad Airways has signalled that it is ready to continue talks on a potential investment in Italy’s troubled Alitalia but it refuses to budge on tough conditions on debt restructuring and job cuts, a source close to the talks said yesterday.
Loss-making Alitalia was kept afloat by a government-engineered €500m ($691m) rescue package last year, but it needs to find a cash-rich partner quickly to revamp its flight network or risk having to ground its planes.
Sources have said that Abu Dhabi-based Etihad could invest €500m in return for a 49 percent stake, but talks reached a stalemate this month when the Italian carrier raised concerns over the Gulf airline’s conditions.
In a letter sent on Tuesday, Etihad reiterated that it wants banks to convert half of Alitalia’s debt of more than €800m into shares and the other half to be written off, the source said. It also wants up to cut 3,000 jobs from Alitalia’s 14,000-strong workforce. “The letter suggests Etihad is willing to negotiate, but the room for manoeuvre is slim,” the source said.
One Italian paper said that Etihad, as an alternative, asked for the airline’s creditor banks, including Italy’s two biggest lenders Intesa Sanpaolo and UniCredit, to provide additional financing of at least €300m. “Etihad continues to lead the negotiations,” said Andrea Giuricin, a transport analyst at Milan’s Bicocca University. “If they want a deal, Alitalia will have to agree.”
Etihad declined to comment on the letter or the status of the talks. Alitalia could not immediately be reached for comment.
Any large job cuts are likely to stir opposition from Italy’s powerful unions, although labour officials have already signalled a willingness to negotiate, given that Alitalia has few options outside an Etihad deal.
Six years after Alitalia was rescued from bankruptcy, the airline is fast running out of cash after an ambitious plan to become a strong regional player failed in the face of aggressive competition from low-cost carriers and high-speed trains. Reuters
