Abu Dhabi-based Etihad Airways, a key investor in Italy's loss-making national carrier Alitalia, has said that the ailing airline has potential to grow as one of the great international brands but only if it embraces change.
Etihad, which has 49 per cent stake in the Rome-based carrier, is restructuring Alitalia and hopes to return it to profitability by 2017.
Etihad Airways CEO James Hogan, speaking in Milan to the International Forum of Sovereign Wealth Funds, said, "Alitalia was on the verge of collapse last year. We invested 560 million euros as part of a 1.76 billion euro restructure of the airline."
"Today, we are the largest single shareholder, with a 49 per cent stake. What did we see in Alitalia that nobody else did? A great brand, a great network, but a poor business in need of a new direction," Hogan said.
He said Etihad Airways saw great potential for both airlines to grow efficiently by working together.
"Partnership offers lower risks, greater rewards and faster outcomes than going it alone. That's good for Alitalia, good for Etihad Airways, good for Italy and good for consumers," Hogan said.
He said Etihad Airways and Alitalia had complementary route networks which, combined, offered approximately 200 destinations.
He said Alitalia gained significant new flight connectivity by connecting with Etihad Airways at its hub in Abu Dhabi, providing extensive access to destinations across Asia, and in Australia and Africa - destinations not served by Alitalia.
"Etihad-Alitalia partnership offers much greater benefits for customers including the alignment of inflight product and service, expansion of both carriers' frequent flier programmes, and synergy benefits including joint procurement and resource sharing," he said.
Recently, Etihad Airways and six equity partners, including Alitalia, participated in an innovative capital raising, through which USD 700 million was collectively sourced from global financial markets.
"Alitalia's Chairman, Luca Cordero di Montezemolo has a clear vision for the success of the Alitalia business, one which we share fully. Together, we are working to re-establish the airline to its rightful place as one of the great international brands," said Hogan.
"Alitalia is ascending. But it still faces challenges. It cannot afford to revert to past practices. For Alitalia to survive and thrive, there must be a relentless focus on costs and efficiency, coupled with a commitment to delivering quality, innovation and value for money. Through our partnership, we can achieve success together," Hogan said.
