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European Union clears Eitihad-Alitalia deal for take-off - with conditions

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Etihad alitalia

Etihad alitalia

Etihad alitalia

Etihad Airways and Alitalia must release slots to a new entrant at airports in Rome Fiumicino and Belgrade, as a condition of European Union approval for the Abu Dhabi based airline's acquisition of 49pc of the loss-making Italian airline Alitalia.

The deal is part of a €1.76bn rescue plan for Alitalia, which doubled its net loss to €569m last year, providing it with funds to invest in more profitable long-haul routes and reduce its dependence on domestic and regional services where it faces fierce competition from low-cost airlines and high-speed trains.

For Etihad, the deal will reinforce its presence in Europe's fourth-largest travel market with 25 million passengers.

Abu Dhabi state-owned Etihad is now emerging as a significant force in European aviation.

It holds a 4pc stake in Aer Lingus along with minority shareholdings in Air Berlin, Air Serbia and Swiss-based regional carrier Darwin Airline, as well as Virgin Australia.

To secure approval Etihad and Alitalia agreed to give up airport slots on the Rome-Belgrade route as Alitalia and Air Serbia are the only carriers offering direct flights on that route. "The Commission had concerns that the monopoly created by the transaction on the Rome-Belgrade route could lead to higher prices and a loss of service quality for passengers," the European Commission said in a statement.

"These commitments adequately address the competition concerns identified by the Commission and should facilitate new entry on the Rome-Belgrade route," the Commission said.

Reuters reported on November 12 that the deal would be cleared with conditions, and that the Commission's transport unit would also give the green light by the end of the year because it complies with rules on EU majority ownership on EU airlines.

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