Premium #133 Can Etihad Really Turn Around Alitalia?

Last week, the long-negotiated agreement for Abu Dhabi based Etihad Airlines to purchase a 49% minority stake in Italy’s beleaguered Alitalia airlines was finalized.  The transaction includes several elements:

• €387.5M in cash for 49% of Alitalia
• €112.5M for a 75% interest in Alitalia’s frequent flyer program
• €60M for 5 pairs of slots at London Heathrow airport
• €300M authorized capital increase from current investors
• €300M in new loans
• €598M in debt restructuring of existing short-to-medium loans

In total, the package is worth €1.8 billion, or about $2.4 billion US.