SYS-CON MEDIA Authors: Peter Silva, Kevin Jackson, Jessica Qiu, Dana Gardner, Dan Stolts

News Feed Item

Alitalia And Etihad Airways Finalise €1,758 Million Investment Deal To Build A Reinvigorated Alitalia As A Competitive, Sustainably Profitable Business

ROME, Aug. 8, 2014 /PRNewswire/ --

  • Transaction implementation agreement will see Etihad Airways invest €560 million in the Italian carrier, becoming a minority shareholder (subject to regulatory approval), with core Alitalia shareholders committing an additional €300 million
  • Additionally, up to €598 million in financial restructuring of short and medium term debt provided by financial institutions and existing bank shareholders
  • €300 million new loan facilities extended by Italian financial institutions
  • Recapitalisation safeguards thousands of Italian jobs and will allow Alitalia to invest in new long-haul routes, a revitalized brand, and a greater focus on Italian tourism and trade promotion
  • New international routes and flights from more Italian cities to Abu Dhabi and beyond
  • Optimised network and increased frequencies will increase competition and choice, while supporting tourism, trade and economic development
  • Alitalia to benefit from network integration and cost synergies with Etihad Airways and its equity partners
  • Goal of sustainable profitability by 2017
  • Alitalia revitalised to embody Italian culture, history, art, fashion and food as an Ambassador for Made in Italy

Etihad Airways and Alitalia today announced that they have signed the transaction implementation agreement which will result in a €1,758 million investment to build a reinvigorated Alitalia as a competitive, sustainably profitable business.

The recapitalised Italian national airline will now be able to invest in a comprehensive strategic business plan which will see new long-haul routes from Rome and Milan, a revitalized brand, and a greater focus on Italian tourism and trade promotion.  Italian travellers will be able to benefit from a wider choice of destinations while new global connections will boost inbound tourism.

Etihad Airways' investment of €560 million will be provided through a combination of equity injections, asset purchases and other financing facilities and funding arrangements to re-structure the airline's balance sheet.  This is to be complemented by a further equity investment of €300 million from existing core Alitalia shareholders, including Intesa San Paolo (€88m), Poste Italiane (€75m), UniCredit (€63.5m), Atlantia (€51m), IMMSI (€10m), Pirelli (€10m) and Gavio (€2.5m).

Additionally, up to €598 million in financial restructuring of short and medium term debt has been provided by financial institutions and existing bank shareholders.  €300 million of new loan facilities have also been extended by Italian financial institutions.

Etihad Airways will take a 49 per cent shareholding in Alitalia, for an investment of €387.5 million.  Its total investment also includes €112.5 million to acquire a 75 per cent interest in Alitalia Loyalty Spa, which operates MilleMiglia, the airline's frequent flier programme, and the purchase by Etihad Airways of five pairs of slots at London's Heathrow Airport valued at €60 million. The slot pairs will be leased back to Alitalia on an arm's length basis.  The transaction is due to be completed on 31 December 2014.

Completion of the equity investment remains subject to completion by Alitalia and its key private and public stakeholders of certain conditions precedent and is also subject to final regulatory approvals.

Etihad Airways President and Chief Executive Officer, James Hogan, said: "For Etihad Airways, this is a strategic, long-term commercial investment. On completion, we are committed, with the other shareholders, to build a reinvigorated Alitalia as a competitive, sustainable and profitable business that can operate successfully in the global air travel market.

"We believe in Alitalia. It is great brand with enormous potential. With the right level of capitalisation and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again.

"Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalise the brand, the airline will increasingly embody all that we recognise as quintessentially Italian – the history, culture, food and fashion. It must be an airline of which Italians can be proud.

"However ultimately it has to work as a business and the goal is for sustainable profitability from 2017."

Mr Hogan said he recognised that many steps had been taken by current Alitalia shareholders, management and workers to stabilise the business ahead of new investment.

"Alitalia can succeed and it can grow again but it needs to build from solid foundations.  We have made it clear from the start that our entire investment should be focused on supporting the implementation of the new business plan, which will see this goal come to fruition.

"The winners from this successful strategy will be Italian and international travellers, who will see better service, new routes and greater competitive choice; Alitalia's employees, who can look forward to a brighter future over the long term, in a business which will grow again; and the Italian people, who can be proud once again of their national airline.

"There is a long road ahead, first to complete the transaction and then to deliver this new vision.  Today marks a critical step on that journey and we are proud to take our place as a strategic investor in the new Alitalia."

Gabriele Del Torchio, Chief Executive Officer of Alitalia, said: "This is an excellent outcome for Alitalia. We have had to take some tough decisions in a very robust negotiation process but we have achieved the consensus we require to create the right shape and size for Alitalia in the future.

"This investment will provide financial stability and enable us to position Alitalia, and the travel and tourism industry in Italy, for long-term growth.

"And for this important result I'd like to thank all the Alitalia staff - men and women, managers and workers, pilots, crew and office staff – who have worked with passion and commitment for our new launch.  The transition to a sustainable and profitable Alitalia has required tough decisions but we all share the conviction that this new beginning, oriented towards growth, will bring new opportunities for everyone."

The comprehensive business plan provides for the revitalization of Alitalia's brand, to embody all the things for which Italy is renowned – food, fashion, culture and lifestyle – in a 'Made in Italy' premium service concept and guest experience.

This will be accompanied by the implementation of measures to drive increased inbound tourism into Italy and to support the country's economic growth.

While maintaining the relevance of short-haul routes, the proposed network plan focuses on the profitable growth of long-haul flying from both Rome Fiumicino and Milan Malpensa. This will include flights to new destinations, increased frequency in certain existing markets and an enhanced network to Abu Dhabi to capitalise on growing traffic between Italy and the UAE, and provide Alitalia's passengers with seamless connectivity to Etihad Airways' global network.

Starting from Winter 2014, Alitalia will increase frequency between Rome Fiumicino and Abu Dhabi from five per week to a daily service, and commence a new daily service between Milan Malpensa and Abu Dhabi. This flying will complement Etihad Airways' existing daily services on these markets and open up a range of new connecting opportunities for passengers of both airlines.

From Summer 2015, Alitalia will also begin to implement connections between other Italian cities and Abu Dhabi, with plans for direct flights from markets such as Venice, Catania and Bologna.

Rome Fiumicino will emerge as a larger European intercontinental hub, with up to five new routes over the next four years, while long-haul flights from Milan Malpensa will more than double to 25 flights a week by 2018. Alitalia's widebody fleet is planned to grow by a third, while its narrowbody fleet will be rightsized to meet the requirements of the new network plan.

Members of the MilleMiglia frequent flier program will be able to 'earn and burn' on Etihad Airways and partner airlines, with future integration of the programmes planned.

While network integration and optimization will deliver top-line revenue growth for Alitalia, the cost synergies inherent in the partnership will provide substantial opportunities. These include streamlined hub operations, and joint procurement in the areas of aircraft, engines, maintenance-repair-operations, training, catering, ground-handling and fuel. The partnership will also pave the way for the redesigning and automating processes and working arrangements in line with best practice, and the adoption of leading IT platforms.

To better serve the Italian cargo market, which is the third largest in Europe, Alitalia's cargo business will be relaunched and expanded, with the establishment of a centre of excellence in Northern Italy, investment in handling capabilities at Italian airports, and the optimization of an integrated cargo network.

James Hogan said: "Italy is a hugely important market for Etihad Airways, from both trade and tourism points of view. The UAE is Italy's top trading partner in the Middle East and North Africa region, and is home to more than 10,000 Italian citizens and 300 Italian companies.

"The possibilities when we knit together our network with those of our existing equity partners, including airberlin, Air Serbia, Etihad Regional, Jet Airways, Virgin Australia, Air Seychelles and Aer Lingus, and of course our strategic codeshare partner, KLM-Air France, will provide the most compelling customer offering."

Etihad Airways currently operates daily services from Abu Dhabi to Rome and Milan, which complement Alitalia's five flights a week from Rome to Abu Dhabi. The two airlines also codeshare to a total of 31 other destinations.

Alitalia and Etihad Airways were last month named as Official Global Airline Carriers for Expo 2015, the upcoming universal Exposition which will be held in Milan from 1 may to 31 October 2015.

The advisors on the transaction were:

Etihad Airways: JP Morgan (financial); DLAPiper and Chiomenti (legal); PricewaterhouseCoopers (due diligence)

Alitalia: Citi (financial); Bonelli Erede Pappalardo (legal)

- Ends -

For B-roll television footage in high definition go to http://tiny.cc/o4k9jx

About Etihad Airways
Etihad Airways began operations in 2003, and in 2013 carried 11.5 million passengers. From its Abu Dhabi base Etihad Airways flies to 108 existing or announced passenger and cargo destinations in the Middle East, Africa, Europe, Asia, Australia and the Americas. The airline has a fleet of 102 Airbus and Boeing aircraft, and more than 210 aircraft on firm order, including 71 Boeing 787s, 25 Boeing 777-X, 62 Airbus A350s and 10 Airbus A380s. Etihad Airways holds equity investments in airberlin, Air Seychelles, Virgin Australia, Aer Lingus, Air Serbia and Jet Airways, and is in the process of formalising its equity investment in Swiss-based Etihad Regional*. For more information, please visit: www.etihad.com

*Operated by Darwin Airline

About Alitalia
Alitalia - Compagnia Aerea Italiana (www.alitalia.com) is a fully private company that started its operations on 13 January 2009. The Company's 2014 summer schedule offers 103 destinations, of which 26 in Italy and 77 for the rest of the world, 186 routes and more than 4,700 weekly flights. The Company carried 23.99 million passengers in 2013. Alitalia is a member of the SkyTeam global alliance and, since 2010, forms part with Air France-KLM and Delta Air Lines of the main air transport Transatlantic Joint Venture. Today, the fleet of Alitalia is one of the youngest in the world with an average age of only 7 years and is one of the most efficient thanks to a reduction in the number of aircraft types and low environmental impact. Alitalia has been recognised by the pollsters of the German Institute of Quality and Finance (ITQF) as "the best airline for the services offered to customers", winning the gold medal with an 82.6% percentage rate of satisfaction. In 2013, for the fourth year in a row, Alitalia, has been recognized as the best airline in the world for the quality of its innovative onboard dining program in Magnifica Business Class. The prize of "Best Airline Cuisine" has been awarded by the American magazine Global Traveler, which has been conducting research on the exceptional achievements of the travel and tourism industry for ten years. In 2013 Alitalia has also been awarded as with the prize Best In-Flight Wine Program at the SAVEUR Culinary Travel Awards.

SOURCE Etihad Airways

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water, are pursuing SmartGrid initiatives that represent one of the more mature examples of SAE. We have s...
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce the value of the network in helping organizations to maximize their company’s cloud experience.
IoT is still a vague buzzword for many people. In his session at Internet of @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, will discuss the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. The presentation will also discuss how IoT is perceived by investors and how venture capitalist access this space. Other topics to discuss are barriers to success, what is new, what is old, and what the future may hold.
Whether you're a startup or a 100 year old enterprise, the Internet of Things offers a variety of new capabilities for your business. IoT style solutions can help you get closer your customers, launch new product lines and take over an industry. Some companies are dipping their toes in, but many have already taken the plunge, all while dramatic new capabilities continue to emerge. In his session at Internet of @ThingsExpo, Reid Carlberg, Senior Director, Developer Evangelism at salesforce.com, to discuss real-world use cases, patterns and opportunities you can harness today.
All major researchers estimate there will be tens of billions devices – computers, smartphones, tablets, and sensors – connected to the Internet by 2020. This number will continue to grow at a rapid pace for the next several decades. With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo in Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be!
Noted IoT expert and researcher Joseph di Paolantonio (pictured below) has joined the @ThingsExpo faculty. Joseph, who describes himself as an “Independent Thinker” from DataArchon, will speak on the topic of “Smart Grids & Managing Big Utilities.” Over his career, Joseph di Paolantonio has worked in the energy, renewables, aerospace, telecommunications, and information technology industries. His expertise is in data analysis, system engineering, Bayesian statistics, data warehouses, business intelligence, data mining, predictive methods, and very large databases (VLDB). Prior to DataArcho...
Software AG helps organizations transform into Digital Enterprises, so they can differentiate from competitors and better engage customers, partners and employees. Using the Software AG Suite, companies can close the gap between business and IT to create digital systems of differentiation that drive front-line agility. We offer four on-ramps to the Digital Enterprise: alignment through collaborative process analysis; transformation through portfolio management; agility through process automation and integration; and visibility through intelligent business operations and big data.
There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how thes...
Last week, while in San Francisco, I used the Uber app and service four times. All four experiences were great, although one of the drivers stopped for 30 seconds and then left as I was walking up to the car. He must have realized I was a blogger. None the less, the next car was just a minute away and I suffered no pain. In this article, my colleague, Ved Sen, Global Head, Advisory Services Social, Mobile and Sensors at Cognizant shares his experiences and insights.
We are reaching the end of the beginning with WebRTC and real systems using this technology have begun to appear. One challenge that faces every WebRTC deployment (in some form or another) is identity management. For example, if you have an existing service – possibly built on a variety of different PaaS/SaaS offerings – and you want to add real-time communications you are faced with a challenge relating to user management, authentication, authorization, and validation. Service providers will want to use their existing identities, but these will have credentials already that are (hopefully) ir...
Can call centers hang up the phones for good? Intuitive Solutions did. WebRTC enabled this contact center provider to eliminate antiquated telephony and desktop phone infrastructure with a pure web-based solution, allowing them to expand beyond brick-and-mortar confines to a home-based agent model. It also ensured scalability and better service for customers, including MUY! Companies, one of the country's largest franchise restaurant companies with 232 Pizza Hut locations. This is one example of WebRTC adoption today, but the potential is limitless when powered by IoT. Attendees will learn rea...
From telemedicine to smart cars, digital homes and industrial monitoring, the explosive growth of IoT has created exciting new business opportunities for real time calls and messaging. In his session at Internet of @ThingsExpo, Ivelin Ivanov, CEO and Co-Founder of Telestax, will share some of the new revenue sources that IoT created for Restcomm – the open source telephony platform from Telestax. Ivelin Ivanov is a technology entrepreneur who founded Mobicents, an Open Source VoIP Platform, to help create, deploy, and manage applications integrating voice, video and data. He is the co-founder ...
The Internet of Things (IoT) promises to create new business models as significant as those that were inspired by the Internet and the smartphone 20 and 10 years ago. What business, social and practical implications will this phenomenon bring? That's the subject of "Monetizing the Internet of Things: Perspectives from the Front Lines," an e-book released today and available free of charge from Aria Systems, the leading innovator in recurring revenue management.
The Internet of Things will put IT to its ultimate test by creating infinite new opportunities to digitize products and services, generate and analyze new data to improve customer satisfaction, and discover new ways to gain a competitive advantage across nearly every industry. In order to help corporate business units to capitalize on the rapidly evolving IoT opportunities, IT must stand up to a new set of challenges.
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, Big Data and deployments are processing massive data volumes from wearables, utilities and other mach...
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at Internet of @ThingsExpo, Erik Lagerway, Co-founder of Hookflash, will walk through the shifting landscape of traditional telephone and voice s...
While great strides have been made relative to the video aspects of remote collaboration, audio technology has basically stagnated. Typically all audio is mixed to a single monaural stream and emanates from a single point, such as a speakerphone or a speaker associated with a video monitor. This leads to confusion and lack of understanding among participants especially regarding who is actually speaking. Spatial teleconferencing introduces the concept of acoustic spatial separation between conference participants in three dimensional space. This has been shown to significantly improve comprehe...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, will discuss single-value, geo-spatial, and log time series data. By focusing on enterprise applications and the data center, he will use OpenTSDB as an example...
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridsto...
The Transparent Cloud-computing Consortium (abbreviation: T-Cloud Consortium) will conduct research activities into changes in the computing model as a result of collaboration between "device" and "cloud" and the creation of new value and markets through organic data processing High speed and high quality networks, and dramatic improvements in computer processing capabilities, have greatly changed the nature of applications and made the storing and processing of data on the network commonplace. These technological reforms have not only changed computers and smartphones, but are also changi...