* To proceed with final documentation if terms agreed
* Deal involves cutting up to 2,900 jobs- source
DUBAI, June 1 Etihad Airways said it had set the
terms for investing in loss-making airline Alitalia and was
looking to conclude the deal, as the Abu Dhabi carrier expands
its reach in Europe.
Both airlines will proceed with final documentation to
complete the transaction once the board and stakeholders in
Alitalia confirm acceptance of the terms, it was announced in a
joint statement on Sunday.
Etihad, which already has stakes in Air Berlin and
Aer Lingus, could invest more than 500 million euros
($682.3 million) in exchange for a 49 percent stake in the
Rome-based airline, sources have said.
No details of the terms of deal or size of investment was
provided in the statement.
Italian Transport Minister Maurizio Lupi told state
television that Etihad was ready to invest around 600 million
euros in Alitalia. He also said the deal would not entail
creation of a separate company to hive off its bad debts.
Abu Dhabi-based Etihad has been looking at the possibility
of an investment in Alitalia since the start of the year. But
the prospect of large job cuts at Alitalia as well as its debt
of at least 800 million euros have been major hurdles in the
One source familiar with the talks said an agreement had
been reached that would involve reducing Alitalia's payroll by
as many as 2,800-2,900 jobs, at least part of which may be
covered by a state-sponsored layoff scheme.
Major job cuts are likely to stir opposition from Italy's
The deal included a compromise over Etihad's request for a
high-speed rail line to the Fiumicino airport in Rome after
Italy said it could not be done quickly, the source added.
"We are delighted to be able to move forward with this
process and look forward to the successful conclusion of the
proposed transaction with Alitalia," Etihad Chief Executive
James Hogan said in the statement.
Alitalia Chief Executive Gabriele Del Torchio said the deal
would provide financial stability to the airline.
The Italian government looks favorably at the partnership,
the statement added.
($1 = 0.7328 Euros)
(Reporting by Praveen Menon and Tim Hepher; Additional
reporting by Gavin Jones; editing by Jane Baird)