Alitalia relaunching cargo service

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Etihad Airways’ investment of 560 million euros ($748.5 million) in Alitalia is going to see the relaunch of the troubled Italian airline’s cargo operations. 

The freight business will operate out of Milan Malpensa Airport and the hub will also be used by Etihad. At the 8 August announcement, Etihad president and chief executive officer,  James Hogan, said: “We are a major cargo business. We will move our own cargo operation through Malpensa, to build the Alitalia cargo business, it is a key part of our strategy.”

The joint Etihad-Alitalia statement says: “To better serve the Italian cargo market, which is the third largest in Europe, Alitalia’s cargo business will be relaunched and expanded, with the establishment of a centre of excellence in Northern Italy, investment in handling capabilities at Italian airports, and the optimisation of an integrated cargo network.” No further information was available from Etihad or Alitalia. At one time Alitalia had operated Boeing MD-11 Freighters.

According to the joint statement, long-haul flights from Malpensa will more than double to 25 flights a week by 2018 and Alitalia’s widebody fleet is planned to grow by a third. The airline already operates widebodies with substantial belly hold capacity. For long haul it has the Boeing 777-300 extended range and the Airbus A330-200. There will also be new long haul routes from Rome. The statement adds that there will be, “joint procurement in the areas of aircraft, engines, maintenance-repair-operations, training, catering, ground-handling and fuel.” Etihad’s fleet also has 777-300s and A330-300s, like Alitalia.

However, Alitalia’s narrowbody fleet will be, “rightsized,” according to Etihad, to meet the requirements of the, “new network plan”. The agreement includes a three-year plan to return Alitalia to profitability. The total being invested in the airline is 1.7 billion euros. This sum consists of the 560 million from Etihad, 300 million euros from Alitalia shareholders, up to 598 million euros in short and medium term debt  restructuring, provided by financial institutions and existing bank shareholders, and new loan facilities extended by Italian financial institutions worth 300 million euros.

Etihad’s 560 million euros will be provided through equity injections, asset purchases and what it calls, “other financing facilities and funding arrangements,” to re-structure the airline’s balance sheet. With its investment, Etihad will take a 49 per cent shareholding in Alitalia for 387.5 million. Its total investment includes a further 112.5 million to acquire a 75 per cent interest in Alitalia Loyalty, which operates MilleMiglia, the airline’s frequent flier programme, and the purchase of five pairs of slots at Heathrow Airport, valued at 60 million euros. The slot pairs will be leased back to Alitalia on what Etihad calls, “an arm’s length basis”.  

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