Alitalia may be back from the brink of bankruptcy after Etihad Airways said it would invest in the debt-laden Italian airline.
Etihad, the national airline of the United Arab Emirates, plans to send an offer letter to Alitalia with the conditions necessary for the deal and its intended equity investment. Once received, the two companies can begin final negotiations to close the deal, according to a joint statement released Sunday.
“An equity investment in Alitalia will be beneficial” for both airlines, said Etihad’s CEO James Hogan. As the airlines move forward with the deal, Etihad is confident there will be a “successful conclusion of the proposed transaction,” he said.
The negotiations have been ongoing over the past several months and have included both companies’ shareholders and the Italian government. Specifics of the deal were not outlined and will still need to be approved by Alitalia’s board and shareholders.
Etihad continues its global expansion with its latest investment in a national airline. It has stakes in seven airlines in countries from Germany to Australia, which have been amassed over the 10 years since the airline’s launch.
Alitalia has struggled to turn a profit since it was privatized in 2008 and came close to bankruptcy late last year before the airline received a massive cash infusion from shareholders and additional credit from its bankers. The stop-gap funds allowed Alitalia to continue operations.
“This is an excellent outcome for Alitalia,” Gabriele Del Torchio, Alitalia’s CEO, said in a statement. “This investment will provide financial stability.”
The Italian government has also voiced its approval for the deal and said it appreciates the strategic importance of an Etihad-Alitalia partnership.