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Lufthansa calls Etihad potential investment in Alitalia ‘unfair competition’
German airline asks European regulators to block funding of ailing carrier
February 4, 2014 6:02 by kippreport
UAE national carrier, Etihad airlines, has expressed interest in investing in Alitalia, however, a decision has not yet been made. A tie-up with Etihad could boost Alitalia’s liquidity and allow it to invest in a new strategy focused on long-haul routes that could make it profitable again. However, the talks have sparked protest from Germany’s largest airline, Lufthansa, which called on European regulators to block Etihad from investing in Alitalia, saying it would amount to unfair competition.
Lufthansa has fiercely lobbied against state-owned Gulf airlines, such as Etihad, Emirates Airline EMIRA.UL and Qatar Airways, and their fast-paced expansion in Europe, having accused them of benefiting from unfair state aid.
Troubled Italian airline Alitalia finalised loan agreements with banks worth $223 million last Monday, January 27, in an attempt to fund its restructuring, while it searches for a partner. One of Etihad’s conditions is for creditor banks to write off parts of the airline’s debt, a source close to Alitalia said, a request the banks have so far refused to agree to.
Alitalia offers access to Europe’s fourth-largest travel market and flies 25 million passengers per year, but has been hit by competition from low-cost carriers and high-speed trains. Bank financing and a 300 million euro capital increase, completed in December, are expected to keep Alitalia in the air for approximately six months. However, the airline urgently needs a strong industrial partner to remain profitable in the long term.