DUBAI Etihad Airways and Alitalia are in the final phase of a due diligence process that may result in an investment by the Abu Dhabi carrier in the troubled Italian airline, both companies said in a joint statement on Sunday.
Alitalia and Etihad have been in talks for weeks on a possible investment by the Gulf carrier, which sources close to the matter say could involve Etihad buying a 40 percent stake in Alitalia for as much as 300 million euros ($404.6 million).
The two companies and their advisors will determine a common strategy that meets the objectives of both parties in the next 30 days, the statement said.
"Any issues that may prevent the establishment of an appropriate business plan will have to be resolved to ensure the plan can be implemented to move Alitalia to sustainable profitability," the statement added.
The announcement comes as Italy's Prime Minister Enrico Letta is on a two-day visit to the United Arab Emirates to boost bilateral ties between the two countries.
A spokesman for the Italian premier's office confirmed that Alitalia has been among the topics discussed in Abu Dhabi. More details on the talks are expected to be released at a scheduled press conference later this evening.
Loss-making Alitalia successfully completed a vital 300 million euro capital hike in December, which analysts said then would keep it flying for six months. But a decision by its former top shareholder and partner Air France not to subscribe to the emergency cash call means the Italian carrier is seeking another industrial partner to help revive its fortunes.
A tie-up with the Gulf carrier 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.
Etihad, on the other hand, is looking to expand its global reach through strategic stake purchases in other airlines. It has already bought minority stakes in several carriers including Air Berlin (AB1.DE), Virgin Australia (VAH.AX) and Aer Lingus.
(Reporting by Praveen Menon in Dubai and Isla Binnie in Milan; Additional reporting by Stanley Carvalho; Editing by Dinesh Nair and Catherine Evans)