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Etihad Airways takes steps towards Alitalia investment Airlines meet in Doha under shadow of MH370 disappearance

DUBAI, June 1, (Agencies): 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 talks. 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 unions.

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.

Meanwhile, the mystery of how Malaysia Airlines Flight MH370 flew into oblivion, and the challenge of finding new ways to track aircraft, will hang over the annual conference of airlines that opens Sunday in Doha. The loss of the Malaysia Airlines plane, with 239 people on board, was a shock to the airline industry, and clouds the event in Doha just as it also celebrates 100 years of commercial aviation. Aircraft being produced today for the next expected boom in traffic are scarcely comparable to the biplanes which carried mail or seaplanes which later assured many long-distance routes before the age of electronic navigation. The main purpose of this 70th annual meeting, organised by the International Air Transport Association (IATA), is to enable its 240 members accounting for 84.0 percent of global air traffic to talk about business prospects for the sector.

But the three-day get-together will open under the shadow of the Boeing 777 airliner which took off from Kuala Lumpur on March 8 bound for Beijing, but flew into danger leaving behind a trail of despair for relatives of the passengers and crew, muddle over what had happened, and mystery over where it had gone. Various theories emerged about how and why the plane may have veered widely off course, and searches switched direction accordingly, but no debris has been found in the southern Indian Ocean where the aircraft is now believed to have looped far off course. The drama also revealed to astonished public opinion that in an age of sophisticated civil and military radar scanning and of GPS satellite location and monitoring systems, an airliner can fly into apparent blind spots, leaving little or no trace. This has led to calls for all airliners to be equipped at modest cost with extra emitters.

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