Etihad Airways in discussions with debt-laden Alitalia

Emirati carrier Etihad Airways is in discussions with debt-laden Italian airline Alitalia, spokesman Tom Clarke said on Thursday, without elaborating.

"Etihad Airways is in discussions with Alitalia. We have no further comment at this time," Clarke said in a terse text message to AFP.

Reports have suggested that the Abu Dhabi-based carrier was preparing a big investment in Alitalia, which is in debt to the tune of 1.2 billion euros (US$1.6 billion).

In October, shareholders gave unanimous approval for a capital increase of up to 300 million euros to save Alitalia from bankruptcy

The carrier has been looking for a foreign partner to rescue it.

Earlier on Thursday, Italian media reported that Italy's postal service would take part in a capital increase for Alitalia and chip in 75 million euros.

But postal officials contacted by AFP did not confirm.

Another 225 million euros in the capital increase have already been contributed by Alitalia's existing private sector investors and by banks.

Air France-KLM, which was until now was the main shareholder with 25 percent, has declined to contribute and will see its share greatly diluted.

Alitalia has launched a vast restructuring plan with 300 million euros in budget cuts and the reduction of 1,900 jobs.

The capital increase plan was formulated in October and November under pressure from the Italian government but the postal service's participation has been widely criticised as a possible state subsidy.

Etihad is vastly expanding and has bought minor shares in several smaller carriers around the world as it competes with larger Gulf rivals Emirates and Qatar Airways.

Etihad owns 29 percent of Air Berlin, 40 percent of Air Seychelles, 19.9 percent of Virgin Australia and three percent of Aer Lingus.

In November, India's Jet Airways said it had completed the sale of a 24-percent stake to Etihad after obtaining regulatory approvals.

Analysts said that, for airlines such as Etihad, part of India's allure is the chance to swell passenger traffic on routes to North America, Europe, the Middle East and other parts of the world.

Etihad also announced in mid-November that it was acquiring 33.3 percent of Swiss carrier Darwin Airline, which it plans to rebrand as Etihad Regional.

The acquisition is awaiting regulatory approval.

Etihad is also due to acquire 49 percent of Air Serbia in January.

SOURCE