* Investors agree to share issue of up to 250 million euros
* Transport minister urges all parties to finalise Etihad tie-up
* Alitalia net loss more than doubled to 569 mln euros in 2013 (Adds size of 2013 loss, CEO comment)
By Alberto Sisto
ROME, July 25 Alitalia shareholders on Friday approved a share issue of up to 250 million euros ($336 million) to keep the Italian flag carrier flying as it seeks to finalise a life-saving tie-up with Etihad Airways.
Abu Dhabi's state-owned Etihad Airways plans to buy a 49 percent stake in the Italian carrier. The two have been in talks for seven months, but a final agreement has been held up by negotiations over thousands of job cuts and a debt restructuring at Alitalia requested by Etihad as a condition for the deal.
The share issue is intended to beef up Alitalia's balance sheet while the deal is finalised. After the shareholders' meeting, the unlisted airline's chief executive publicly disclosed the scale of its 2013 net loss for the first time: 569 million euros, more than double its loss the previous year.
"This cash call doesn't change the fact that Alitalia is in a state of emergency," said Andrea Giuricin, a transport analyst at Milan's Bicocca university. "They urgently need to reach a deal with Etihad."
Alitalia has made an annual profit only a few times in its 68-year history and received numerous state handouts before being privatised in 2008. It was kept afloat by a government-engineered 500 million euro rescue package last year, but risks having to ground its planes unless a deal can be struck with cash-rich Etihad to allow it to revamp its flight network.
Etihad Chief Executive James Hogan said last week he expected to conclude the deal this month, although he added that the deadline may be extended, if needed.
Alitalia CEO Gabriele del Torchio told journalists about the 2013 loss as he left the company's headquarters on Friday. "Last year finished with a loss of 569 million (euros), partly because we have done a big clean-up of our balance sheet," he said.
"IMPROVEMENT OR ABYSS"
Earlier in the day, Del Torchio denied an unsourced report in daily newspaper Corriere della Sera on Friday which said Hogan had given Alitalia until Monday to agree to the tie-up or else the Gulf carrier's proposal would no longer stand. A source close to Etihad also said there was no Monday ultimatum.
He later added that the management of both airlines would meet over the weekend to seek to finalise the deal "as soon as possible". Another shareholder meeting may be called this summer to discuss the Etihad deal, one investor said.
Alitalia's creditors, which include Italy's two biggest lenders Intesa Sanpaolo and UniCredit, have in principle agreed to restructure parts of Alitalia's debt by writing off some of it and converting other parts into equity.
However, sources told Reuters this week that Poste Italiane, which invested in Alitalia last year as part of a government-engineered rescue and now owns 20 percent, said it would only invest more in Alitalia if it can avoid taking on the carrier's past liabilities, a move that could hamper the Etihad deal.
Transport Minister Maurizio Lupi on Friday urged all parties to accept their responsibilities and finally come to an agreement, saying the options for Alitalia were either "improvement or the abyss".
A marriage with Etihad could bring Alitalia money to invest in higher-margin, long-haul routes and make it less reliant on domestic and regional routes where it has struggled to compete against low-cost airlines and high-speed trains.
Etihad already has stakes in Air Berlin and Aer Lingus. A stake in Alitalia, which offers access to Europe's fourth-largest travel market and flies 25 million passengers a year, would boost its efforts to expand in Europe.
($1 = 0.7434 Euros) (Additional reporting by Paola Balsomini; Writing by Agnieszka Flak; Editing by Pravin Char)