Alitalia To Present Final Proposal To Etihad On Thursday

Italy’s loss-making flag carrier Alitalia is working on a final proposal to present to Etihad on Thursday in a push to lock in an investment by the Abu Dhabi-based airline, a person close to Alitalia shareholders said on Wednesday.

Italy’s transport minister, the prime minister’s chief of staff, Alitalia’s senior management and major shareholders, including top bank UniCredit, met to discuss the issue on Wednesday at the prime minister’s office in Rome.

“Progress has been made, now we are working to prepare a response that Alitalia will give to Etihad tomorrow,” the person close to the airline’s shareholders said after the meeting.

Etihad’s plans to take a 49 per cent stake in Alitalia, which has made a profit only a few times in its 68-year history, has been held up by disagreements over Alitalia’s 800 million euro ($1.07 billion) debt pile, and plans for job cuts that have stoked outrage among Italian unions.

The main issue now under discussion was whether a capital hike of up to 250 million euros approved by Alitalia shareholders last week would be enough to cover any losses Alitalia may make before a deal is finalised and pay for past liabilities, two other people close to the talks said.

The upper limit for the capital hike could be raised to 300 million euros to meet Etihad’s demands, the person close to Alitalia shareholders said.

After seven months of talks about a tie-up, Etihad’s chief executive said earlier in July he expected to conclude the deal this month, but that the deadline could be extended if needed.

Also attending Wednesday’s meeting were the chief executive of Italy’s post office operator Poste Italiane and the chief financial officer of Italian motorway operator Atlantia , which owns a 7.4 per cent stake in the airline.

Poste Italiane has agreed to inject a further 65 million euros into Alitalia to help smooth the way towards a deal with Etihad, after investing 75 million euros last year as part of a government-engineered rescue package, sources said on Tuesday.

Atlantia’s chief executive said on Tuesday that Alitalia was “playing with fire” and said it was indispensable that the process be sped up this week.