Etihad CEO Talks Latest on Alitalia Investment

etihad airwaysEtihad Airways President and CEO James Hogan spoke about the airline's big investment in Alitalia at the Rimini Roundtable Discussion, an annual event held in the historic Italian town of Rimini to discuss issues of cultural and economic importance to Italy.

Addressing the segment titled "Banking on and Investing in Italy", Hogan said, "Alitalia is a company with a great heritage and global brand recognition. But over many years Alitalia has lost its way and become a challenged business.”

Etihad Airways invested 560 million euros in a multi-level deal comprising a 49 per cent equity stake in Alitalia, a 75 percent stake in Alitalia's loyalty program, MilleMiglia, the purchase from and leaseback to Alitalia of five pairs of arrival and departure slots at London Heathrow Airport, and shareholder loans to reduce Alitalia's immediate financial liabilities. Etihad’s commitment was the largest part of a broader investment with other stakeholders, which totalled 860 million euros.

Hogan said the Etihad Airways investment in Alitalia was a cost-effective way for both airlines to progress, while delivering more choice and better quality to consumers. 

Hogan said that as a strategic shareholder, Etihad Airways needed to see a return on its investment, and together with Alitalia’s management had set a three-year timeline for achieving sustainable profits. In this first year, the aim is to reduce losses, with break-even targeted in 2016 and profitability in 2017.

"We are not a bank,” Hogan said. “We needed to stabilize the business financially by providing fresh capital. We also needed to work with Alitalia, its unions and its partners to identify immediate opportunities to cut costs. These included seeking efficiencies, restructuring the network and schedules, and reducing the short-haul fleet to maximize aircraft utilization. There were immediate results."

Etihad Airways helped expand Alitalia's global reach by connecting the networks of both airlines via Etihad's hub and home base in Abu Dhabi, capital of the United Arab Emirates, with each carrier entering into codeshare agreements on each other’s services. Etihad also assisted Alitalia in sourcing new wide-body aircraft to increase long-haul services.

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