Sources says Abu Dhabi airline has finished examining books of Italian carrier
Etihad Airways has finished examining Alitalia's books and will soon present a plan to revamp the loss-making Italian airline that is likely to include demands for job cuts and debt restructuring, several sources familiar with the matter said.
Alitalia was kept afloat by a government-engineered 500-million euro rescue package last year but it needs to quickly find a cash-rich partner willing to invest to revamp its flight network or else risks having to ground its planes.
Etihad has been in the final phase of due diligence for a possible investment in Alitalia since February. A tie-up with the Abu Dhabi carrier could bring Alitalia the resources it needs to invest in a new strategy focused on long-haul routes.
"The process of due diligence is completed," one of the sources said, adding that the books had been inspected.
Etihad and Alitalia declined to comment.
Italy's Transport Minister Maurizio Lupi told parliament on Wednesday that Etihad could present its industrial plan for Alitalia to the government by the end of this week.
One of the sources said that if the two sides reached an agreement, an offer from Etihad could arrive by mid-May.
However, both Etihad and Alitalia have acknowledged that a deal is not certain, with big hurdles still to be resolved.
Sources have previously said Etihad was interested in taking a stake of up to 40 percent in Alitalia, but added that the Italian airline's debt of around 900 million euros ($1.24 billion) and its headcount were a concern to the Gulf carrier.
For Etihad, a stake in Alitalia would further its effort to expand its global reach through strategic holdings in other airlines. Alitalia offers access to Europe's fourth-largest travel market and flies 25 million passengers a year.
It has said it will invest in the Italian carrier only if it fits in its network and if Alitalia has a credible plan to return to profit.
The sources said Etihad wanted Alitalia's creditors, which include Intesa Sanpaolo and UniCredit, to write off big parts of the airline's debt.
Other options were for banks to agree to postpone the deadline for repayments or convert debt to equity, they said. "The banks are willing to talk about debt restructuring," one of the sources said.
Disagreements over a debt restructuring scuppered efforts by Alitalia to secure more capital from its shareholder Air France-KLM last year. Air France-KLM eventually allowed its 25 percent stake to be diluted to around 7 percent.
Another point of contention is Alitalia's staff of around 14,000 workers, with Etihad pushing for job cuts of several thousand people, the sources said.