DUBAI: Fast-growing Gulf airline Etihad Airways said Wednesday that it had reached a deal in principle to buy a 49-percent stake in struggling Italian carrier Alitalia, expanding its collection of foreign investments to one of Europe’s most recognizable aviation brands.
Etihad is owned by the government of Abu Dhabi, the oil-rich capital of the United Arab Emirates. It has been expanding both by building its own route network and through a rapid-fire series of investments in airlines from Europe to Australia.
In a joint statement, Etihad said it and Alitalia “have agreed the principal terms and conditions of a proposed transaction” for the near-half stake in the Italian flag carrier following months of negotiation.
“The airlines will now move to finalize the transactional documents, that will include the agreed upon conditions, as soon as possible,” the airline said.
The airlines did not disclose the proposed terms of the deal, which they said remains subject to regulatory approval. European Union authorities will want to ensure any deal does not violate competition rules.
Etihad has already acquired stakes in a number of European carriers, including Air Serbia, Ireland’s Aer Lingus and Germany’s second largest airline, Air Berlin.
It is also a partial owner of Virgin Australia, Air Seychelles and India’s Jet Airways.
Etihad is smaller than both its Gulf competitor Qatar Airways and the region’s largest carrier, Dubai-based Emirates.
A successful deal would likely involve banks renegotiating more than $700 million in debt, canceling some and converting the rest into shares, according to Italian media reports.