April 28, 2014 / 12:46 PM / in 4 years

Italy banks mull converting Alitalia's debt into equity-source

MILAN, April 28 (Reuters) - Alitalia’s top creditors, banks Intesa Sanpaolo and UniCredit, are willing to convert debt worth 400 million euros ($553 million) into shares in the airline to facilitate a deal with Gulf-based peer Etihad Airways, a source close to the matter said.

However, the banks want the Italian government to do its part and help ease a possible 49 percent investment by Etihad into the loss-making Italian carrier, the source said.

Alitalia, now a private company, was kept afloat by a rescue package engineered by the Italian government last year but needs to find a cash-rich partner quickly to revamp its flight network or risk having to ground its planes. ($1 = 0.7227 Euros) (Reporting by Lisa Jucca, editing by Agnieszka Flak)

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