14 April 2014 at 08.19 GMT
The board of Alitalia is due to meet today to discuss the prospect of Etihad Airways buying nearly half of the ailing Italian carrier.
This follows a meeting between Etihad chief executive James Hogan and Italy’s prime minister Matteo Renzi.
Alitalia was kept afloat by a government-engineered €500 million rescue package last year, but it needs to find a cash-rich partner quickly to revamp its network.
Abu Dhabi-based Etihad has been looking at Alitalia’s books for a possible investment since the start of the year. But the prospect of large job cuts at Alitalia and the airline’s debt of at least €800 million had been major hurdles in the talks.
A source with knowledge of the talks is reported as saying Etihad was considering investing up to €500 million in Alitalia and was inching towards an offer.
Out of that investment, €350 million would be for a 49% stake in the Italian airline, the source added.
“The letter of intent (from Etihad) will arrive within a few days,” the source told Reuters on Friday. “Etihad is not coming in to patch things up but to change the whole face of Alitalia which will become a five-star airline.
“One of the conditions put forward by the Gulf airline is for 2,000 job cuts out of Alitalia’s 14,000-strong workforce,” the source said.
This is much lower than cuts of up to 7,000 staff reported in the Italian press.
The source said the Italian government believed Etihad’s demands on the jobs front were not insurmountable.
Alitalia has called a board meeting for today at which Etihad’s proposals are likely to be discussed, another source close to the situation said.
A stake in Alitalia, which offers access to Europe’s fourth-largest travel market and flies 25 million passengers a year, would further Etihad’s efforts to expand its global reach through strategic holdings in other airlines such as Air Berlin, Aer Lingus and Air Seychelles.
Etihad and Alitalia both declined to comment.
Sourced from Travel Weekly