Last year’s ground-breaking investment by Etihad Airways in Alitalia has revitalised Italy’s national airline, and set it on a new course towards sustainable profitability, the President and Chief Executive Officer of Etihad Airways, James Hogan, said today.
Mr Hogan was speaking at the Rimini Roundtable
Discussion, a prestigious annual event held in the historic Italian town of
Rimini to discuss issues of cultural and economic importance to Italy.
Addressing the segment titled "Banking on and
Investing in Italy", Mr Hogan said: "Alitalia is a company with a
great heritage and global brand recognition. But over many years Alitalia has
lost its way and become a challenged business.”
Etihad Airways invested 560 million euros in a
multi-level deal comprising a 49 per cent equity stake in Alitalia, a 75 per
cent stake in Alitalia's loyalty program, MilleMiglia, the purchase from and
leaseback to Alitalia of five pairs of arrival and departure slots at London
Heathrow Airport, and shareholder loans to reduce Alitalia's immediate
financial liabilities. Etihad’s commitment was the largest part of a broader
investment with other stakeholders, which totalled 860 million euros.
“Aviation is a global industry, not a local one,” Mr
Hogan said. “Like so many other industries,
aviation should have access to global investment funds in order to provide the
capital required to grow efficiently and remain competitive.
“Global investment is not a threat,” he said. “It is
both a lifeline and an energiser, which can only be good for European aviation,
European economies and European jobs.”
Mr Hogan said the Etihad Airways investment in
Alitalia was a cost-effective way for both airlines to progress, while
delivering more choice and better quality to consumers.
"Let’s not forget that nobody else wanted to
invest in Alitalia,” Mr Hogan said. “But we see a great future for Alitalia,
and we are committed to working with other shareholders, and with the airline,
to help rebuild it as a premium brand and a profitable business.
"A strong Alitalia is essential for Italy," he
said. "Without Alitalia, air connectivity to, from and within Italy would
be seriously diminished and left to others without the same commitment to Italy
Mr Hogan said that as a strategic shareholder, Etihad
Airways needed to see a return on its investment, and together with Alitalia’s
management had set a three-year timeline for achieving sustainable profits. In
this first year, the aim is to reduce losses, with break-even targeted in 2016
and profitability in 2017.
"We are not a bank,” Mr Hogan said. “We needed to
stabilise the business financially by providing fresh capital. We also needed
to work with Alitalia, its unions and its partners to identify immediate
opportunities to cut costs. These included seeking efficiencies, restructuring
the network and schedules, and reducing the short-haul fleet to maximise
aircraft utilisation. There were immediate results."
Etihad Airways helped expand Alitalia's global reach
by connecting the networks of both airlines via Etihad's hub and home base in
Abu Dhabi, capital of the United Arab Emirates, with each carrier entering into
codeshare agreements on each other’s services. Etihad also assisted Alitalia in
sourcing new wide-body aircraft to increase long-haul services.
"We have not only ensured that Alitalia stays in
the air,” Mr Hogan said. “We have also invested in protecting and creating jobs
in Italy. We have invested in rebuilding the Alitalia brand. And we have
invested in Alitalia with the clear commitment that we will help it to grow
into a prestige global brand, and an airline and company which contributes to