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'Long and difficult' process ahead in Etihad-Alitalia deal

EC poised to resume talks with new Renzi government

20 February, 13:25
'Long and difficult' process ahead in Etihad-Alitalia deal (ANSA) - Brussels, February 20 - The European Commissioner responsible for competition, Joaquin Almunia, threw up a potential barrier Thursday to a planned investment by Abu Dhabi's Etihad Airways in struggling Italian airline Alitalia.

Almunia warned that "long and difficult discussions" would be needed amid allegations of the use of disguised State aid in the deal, in contravention of European competition rules.

He noted that the issue had been under discussion between the EU and the former government of Enrico Letta, now in the process of being replaced by premier-designate Matteo Renzi.

"We were talking to the Letta government," said Alumnia about allegations made in early February by German airline giant Lufthansa, which asked the EC to halt the planned investment by Etihad on grounds it would benefit from anti-competitive State aid.

"Now we are waiting to see who will be interlocutor in the Renzi government in order to resume contact and continue the conversation," said Alumnia.

"Long and difficult discussions will be necessary," he added.

In early February, Etihad and Alitalia issued a joint statement saying they were in the "final phase" of negotiations for a deal that would see the Abu Dhabi carrier buy as much as a 40% stake in its Italian counterpart, the equivalent of a much-needed capital injection of 350 million euros.

The main issue in talks has been Etihad's condition that Alitalia renegotiate some of its the debt, as well as cut payroll costs by potentially as much as 128 million euros.

In mid-February the airline reached a deal with unions to avoid nearly 2,000 redundancies.

The agreement involved reduced working hours for a percentage of staff, and the rotations of other positions with temporary layoffs.

The complaint by the Frankfurt-based Lufthansa came as Alitalia CEO Gabriele Del Torchio said the troubled airline was poised to sign a 200 million euros financing deal with banks as part of a 500 million euros bailout package engineered by the Letta government last autumn.

This also included a controversial 74-million euro investment by Italy's state-owned post office Poste Italiane, which prompted other European carriers to called on the EC to intervene.

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