Etihad to be content with 49% for now

Just in the nick of time, troubled flag carrier, Alitalia has agreed a rescue deal with Etihad, under which the rising Middle Eastern player will take control of 49 per cent of the Italian airline, whose fortunes have been doing anything but rising for several years.

Alitalia was due to run out of cash by August, so the end was more or less in sight for the airline. Yesterday’s announcement that the pair had formally agreed the deal had been expected since it emerged earlier in the month that the Italian operator’s board had accepted an offer from Etihad to invest.

In fact, yesterday’s announcement did not go much further, simply saying that the Gulf carrier had agreed to take a 49 per cent equity stake in Alitalia.

“The airlines will now move to finalise the transactional documents, that will include the agreed upon conditions, as soon as possible,” it added.

Just what some of those terms and conditions are remain to be seen. Alitalia was said to have been dragging its heels on an agreement as it was concerned about its latest investor’s demands that 2,200 jobs be cut and that it restructure its debts.

The deal gives Etihad a stake in yet another airline to join its 3 per cent holding in Irish flag carrier, Aer Lingus and its 29.21 per cent position in German opeator, Air Berlin.

At first glance, it seems that Alitalia has more to gain than Etihad.

The Abu Dhabi-based group is cash rich and will presumably have to commit resources to ensure that its new partner continues flying. Italy's transport minister, Maurizio Lupi, recently said the amount will come to €1.25 billion over four years.

In return, it is getting a stake in a business with 25 million passengers a year and access to Europe’s fourth biggest travel market.

Of course, EU rules on airline ownership mean that Etihad is stuck, for now at least, at just 49 per cent of that business and no more.