Global investments not a threat, but a lifeline - Etihad Airways
chief
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, Etihad Airways, James Hogan told the Rimini Roundtable
Discussion.
The discussion is an annual event in the historic Italian town of
Rimini to discuss issues of cultural and economic importance to Italy.
On 'Banking and Investing in Italy', Hogan said, "Alitalia has 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 percent equity stake in Alitalia, a 75 percent 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," Hogan said.
"Like so many other industries, aviation should have access to global
investment funds to provide the capital needed to grow efficiently and
remain competitive. Global investment is not a threat. It is a lifeline
and an energiser, which can only be good for European aviation, European
economies and European jobs."
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,"
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 seriously
diminish and be left for others without the same commitment to Italy or
Italians."
Hogan said that as a strategic shareholder, Etihad Airways needed to
see a return on its investment and 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," Hogan said. "We needed to stabilise the business
financially by providing fresh capital. We also needed to work with
Alitalia, its unions and partners to identify immediate opportunities to
cut costs. These included seeking efficiency, restructuring the network
and schedules and reducing the short-haul fleet to maximise aircraft
use. 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 others' 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," 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
Italy."
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