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Alitalia's long-haul network and Etihad's short-haul feed are enhanced with Etihad's proposed stake

24-Apr-2014 6:56 PM

Alitalia has lost over EUR1.1 billion since its 2009 reincarnation, hardly an indication of fundamental change. Despite this, Etihad Airways remains in negotiations to invest potentially up to EUR500 million for a 49% stake in the carrier, the maximum allowed under EU regulations. What, it might be asked, does Etihad see of enough value to be in nearly five months of serious negotiations?

First, possibly, is Italy's domestic market, the 13th largest in the world and largest in Europe after Spain for seat and ASK capacity. Overall when ranked on all seats to/from/within the country, Italy is the world's eighth largest market overall for seats but lower when looking at ASKs. Etihad is weak in Italy, entering only in 2007 when Emirates and Qatar already had a sizeable presence. Etihad's 2014 capacity into Italy is expected to be a fraction of Emirates' and Qatar's. A role in Alitalia can help bolster Etihad in Italy, building on their existing codeshare.

In turn, Etihad can provide a virtual network solution for Alitalia in Asia, where Alitalia is extremely small despite sizeable capacity from competing Asian carriers. Etihad meanwhile can feed Alitalia's European network, alleviating some pressure from LCCs, in addition to Alitalia's eastward long-haul flights to the Americas. The network synergies have potential, but Etihad will need a long time-frame to capture a return on its investment; that is, assuming the Italian government is finally willing to restructure Alitalia in a sustainable way.

Delta Air Lines continues to work towards achieving investment-grade with strong 1Q2014 results

24-Apr-2014 9:52 PM

AirAsia X drives 43% transit traffic at Kuala Lumpur's KLIA. Can Singapore follow the same recipe?

24-Apr-2014 11:00 AM

Porter Airlines’ plans remain in limbo as its competitors work to sustain their long-term viability

23-Apr-2014 9:58 PM

Airlines in Transition: Hybridisation and operating dual brands

23-Apr-2014 3:41 PM

Myanmar Airways International outlook: intense competition, shrinking market share create challenges

23-Apr-2014 11:55 AM

Myanmar international aviation outlook: after two years of rapid expansion, growth starts to slow

22-Apr-2014 11:00 AM

CAPA’s Hall of Fame - Tim Clark

25-27 November, 2013, Airlines in Transition 2013
CAPA’s Hall of Fame celebrates the greatest of aviation legends – individuals who have made a substantial difference to the industry. Recent inductee Tim Clark, president of Emirates, has built the world’s leading long-haul network and long-haul transit hub, implemented new widebody aircraft programmes and recently  spearheaded a ground-breaking alliance with Qantas. Sir Tim looks back at the growth of Emirates and how the airline has remained true to its original business model from the late 1980s, despite achieving massive growth.

Peter Foster - President, Air Astana

Willie Walsh - CEO, IAG

Alan Joyce - CEO, Qantas

Alex Cruz - CEO, Vueling

Christoph Mueller - CEO, Aer Lingus
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