Why Etihad is still interested in Alitalia

Why Etihad is still interested in Alitalia
Updated 24 July 2017

Why Etihad is still interested in Alitalia

Why Etihad is still interested in Alitalia

LONDON: Former Etihad chief James Hogan once called Alitalia the “sexiest airline in Europe,” but three years later it is turning heads for all the wrong reasons.
Still, the Abu Dhabi-based carrier has emerged as a potential investor in the airline, which went into administration in May as losses piled up.
But the key word is “potential,” said analysts skeptical of Abu Dhabi’s willingness to throw more good money after bad less than three years after Etihad revealed a €1,758 million ($2,050 million) investment plan aimed at revitalising a brand tarnished by financial losses and industrial-relations strife.
Alitalia received about 10 non-binding offers for a total or partial takeover of Alitalia, Italian media reported on Friday — including from Etihad and Ryanair, the European low-cost airline.
Alitalia was one of a number of struggling airlines targeted by Etihad under former chief executive James Hogan, who developed a so-called equity alliance strategy where the Abu Dhabi carrier took stakes in often loss-making carriers in an effort to rapidly expand its global route network.
Announcing the partnership in October 2015, the 60-year-old Australian airline executive, who left the airline this summer, predicted Alitalia would be profitable in 2017 — but instead it was placed into administration.
“Alitalia was on the verge of collapse. We saw a great brand, a great network, but a poor business in need of a new direction,” Hogan said at the time. “Alitalia has now been reinvented.”
The government of Italy in May pledged to provide a bridging loan to keep the the carrier flying for around six months. Interested parties have until October to make binding offers.
But if no buyer comes forward the airline risks being wound up with the loss of about 20,000 jobs.
An Etihad spokesman said: “Strong ties continue to exist between Alitalia and Etihad Aviation Group and we remain open to exploring all options to maintain and potentially deepen those ties for mutual benefit.”
Alitalia did not immediately respond to a request for comment when contacted by Arab News.
Still, analysts say that in submitting a non-binding offer, the airline may be more interested in ensuring its interests in the carrier are protected rather than mulling any serious additional investment.
“Given the toxic nature of the prevailing environment at Alitalia, I would have thought that this would be a great opportunity for Etihad to finally cut strings with it and move on to pastures new, particularly in the wake of selling off its Darwin Airline stake,” said Saj Ahmad, the chief analyst at StrategicAero Research.
“There are more question marks than answers when it comes to Alitalia — and it’s very telling that the interests shown in it are all non-binding. It’s evident that whoever is willing to take on Alitalia’s angst wants to do so on their terms or not at all. And frankly, who could blame them?”
Etihad and Dubai-based Emirates have both cut jobs and embarked on sweeping structural changes in response to tougher operating conditions and overcapacity in the global aviation market.
Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al-Mazrouei said in January that it was important to ensure the airline was “the right size and the right shape.”