Etihad Airways to acquire a 49% stake in troubled Alitalia following strategy of expansion growth

Etihad Airways confirmed today that it reached an agreement to acquire Italy-based Alitalia in a deal that is believed to become the largest investment of the airline in a foreign carrier to date. Earlier in June the airline, which is based in Abu Dhabi revealed that it would purchase Alitalia in case it agrees to meet several conditions, which the troubled Italian carrier seemed to have fulfilled.

The two companies made a joint statement and shared that they reached an agreement on the deals major terms, according to which Etihad Airways is to get a 49% stake in Alitalia. The airlines also explained that they still have to sign the final documents for the takeover, but they were doing everything possible to finalize the deal as soon as possible.

Neither Alitalia, nor Etihad Airways provided any additional information about the conditions of the acquisition or about the price of the deal, but they both explained that completing the transaction depends on pending approval by the regulatory authorities.

The announcement comes after months of negotiations, which were followed by decision of Alitalias board that voted on June 13th to accept the bid of Etihad to invest in the Italian carrier.

The Transport Minister of Italy announced that Etihad is ready to make an investment that amounts to up to 1.25 billion euros (1.70 billion dollars) over the next four years. According to Minister Maurizio Lupis statement, Etihad plans to invest 560 million euros (761.6 million dollars) at first and then complete the investment by adding further 690 million euros in Alitalia over the negotiated period. Mr. Lupi also revealed that the Abu Dhabi-based airline is considering to reduce the workforce of Alitalia by 2 251 to 11 470 employees.

The deal is considered beneficial for Etihad Airways, which is following a strategy of expansion, by adding another stake to the company and providing it with the opportunity to work on improving its strategy and management. This will be the eight investment Etihad makes in an airline, and it is also considered to rank among the largest ones in a foreign airline.