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Etihad pushes to agree Alitalia deal this month

By AFP - Jul 18,2014 - Last updated at Jul 18,2014

ROME — Etihad Airways chief James Hogan said this week he aimed to complete negotiations on buying 49 per cent of Alitalia by the end of the month but stressed the company had to be “right-sized” first.

“We’re all focussed on the end of this month. With our agreement, more time is allowed but our focus is the end of the month,” Hogan said during a visit to Italy, where he was launching a new Etihad route between Abu Dhabi and Rome.

“We are in the final stages of the negotiations. We do need to right-size the airline,” he indicated, as Alitalia management continued talks with unions for around 1,600 job cuts.

“We don’t step into these negotiations unless we’re convinced the airline will move to profitability,” Hogan added. “If we complete, we’ll complete with the right foundation. The key issue is getting the cost base right.”

Alitalia “needs to be re-energised and brought back alive,” he continued, noting that “a re-energised Alitalia could be one of the most successful airlines in Europe but to achieve that we have to have the right starting point”.

Alitalia said it had negotiated a deal with current stakeholders to renegotiate Alitalia’s debt of about 565 million euros ($765 million).

Asked about the future role for Air France-KLM, an existing shareholder, Hogan said: “Air France and KLM and Delta are all very important partners. We expect that relationship to continue.”

The Emirates national carrier — based in Abu Dhabi — is planning to buy a 49 per cent stake in the debt-laden Italian flag carrier, which currently employs 12,800 people.

Etihad’s initial investment is expected to be around 560 million euros ($762 million), and 660 million euros more has been mooted in future to develop the airline.

Etihad has expanded hugely since it was founded in 2003 and now has stakes in India’s Jet Airways, Air Serbia, Air Seychelles, Aer Lingus and Air Berlin.

Alitalia’s chief executive on Sunday hailed a preliminary deal with trade unions over layoffs, describing it as a “decisive step” that he hoped would help seal a partnership with Etihad.

Gabriele del Torchio said in a statement that layoffs were “painful but necessary to restore development and a future to the entire sector”.

At talks between Alitalia and unions over the weekend, there was a partial agreement on laying off 1,635 workers — with some being moved to other companies in the aviation sector and others receiving redundancy packages.

Most unions have agreed, with the exception of Italy’s biggest union, the CGIL, and the far-left USB union.

The agreement “has been signed by unions representing more than 70 per cent of Alitalia workers”, Transport Minister Maurizio Lupi, who has been mediating the management-union negotiations, was quoted by the ANSA news agency as saying.

“Etihad’s entry into Alitalia capital will create a new and very competitive sector of the Italian economy, strongly oriented towards foreign markets,” Del Torchio said.

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