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Etihad says no decision yet on Alitalia investment

No formal offer or commitment on airline partnership

03 March, 13:46
Etihad says no decision yet on Alitalia investment (ANSA) - Rome, March 3 - Etihad has not yet made a decision on investing in troubled Italian airline Alitalia, the chief executive of the Abu Dhabi-based carrier said Monday, according to Bloomberg news agency. "We have not committed in any form to investing or not," said Etihad Airways Chief Executive Officer James Hogan.

He told a news conference in the United Arab Emirates that Etihad would make a decision "in the next two weeks" on what action would be most appropriate for his airline's shareholders as well as "what we can do under European legislation".

European airlines, including German carrier Lufthansa, have complained of disguised State aid in a tie-up between Etihad and Alitalia, in contravention of European Union competition rules.

Hogan added that Etihad is "convinced" that the Italian airline can return to profitability.

For weeks, intense negotiations have continued between Alitalia and Etihad, which has been carefully scrutinizing the Italian carrier's books.

Last week, Alitalia Chief Executive Officer Gabriele Del Torchio was said to be "optimistic" about the outlook for the deal because it would be "convenient for both (parties)".

A deal would include conditions set by Etihad on cleaning up the Italian carrier's finances and reducing labour costs.

It is expected that nearly 80 million euro can be saved annually with rotating layoffs and another 40 million euro saved through wage cuts.

A partnership with Alitalia would also deepen Etihad's existing links with the Italian company's minority investor and code-share partner Air France-KLM, which previously refused a further investment in the cash-starved Italian carrier.

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.

But the arrangement, as well as other plans to bring Alitalia back to profitability, have been controversial.

In addition to Lufthansa's competition, the owner of British Airways has said that a plan coordinated by the Italian government to rescue Alitalia triggered the same concerns.

The complaints came as Alitalia was poised to sign a 200-million-euro financing deal with banks as part of a 500-million-euro bailout package engineered by the previous Italian government last autumn.

This also included a controversial 74-million euro investment by Italy's state-owned post office Poste Italiane.

International Airlines Group (IAG), the holding company that owns British Airways, Iberia and Vueling called that a form of protectionism and is illegal under EU laws governing state assistance to businesses.