Deal could help Italian carrier avoid bankruptcy
Abu Dhabis state-owned Etihad Airways has announced it has agreed to buy a 49 per cent stake in Italys Alitalia airline.
Etihad, which is buying stakes in airlines around the world to rapidly increase its international reach, could help Alitalia avoid bankruptcy.
In 2013, the Italian government engineered a rescue plan to keep Alitalia flying while it searched for a new partner to help in the carriers revival. Negotiations over a cash injection with the loss-making airlines top shareholder, Air France-KLM, broke down in November.
The two airlines will now finalise the deal as soon as possible, subject to regulatory approvals, the carriers said in a joint statement, without elaborating on the terms of the deal.
Since December 2011, when Etihad purchased 29 per cent of Air Berlin, it has bought stakes in Air Seychelles, Irish flag carrier Aer Lingus, Virgin Australia and Indias Jet Airways.
The Abu Dhabi carrier has also been more active in signing codeshare agreements, with nearly 50 deals signed to date, compared with 12 each by Dubais Emirates Airline and Qatar Airways. Etihad also has majority ownership of Air Berlins frequent flyer programme.
But it is a strategy that is filled with risk. Some airlines Etihad has bought stakes in may take several years to turn around, and codesharing deals can be damaging to an airlines brand if the standards of service offered by the partner airline fail to match those associated with the carrier from which the passenger has bought the ticket.
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