Etihad sales agent ‘takes’ Alitalia, as Air Malta comes closer to equity sale

An announcement that the Abu Dhabi airline, through Alitalia, will be taking over equity in the ailing Air Malta could be expected within the first quarter of 2016,

Etihad equity group: Air Berlin, Air Seychelles, Virgin Atlantic, Aer Lingus, Jet Airways, Air Serbia and Eithad
Etihad equity group: Air Berlin, Air Seychelles, Virgin Atlantic, Aer Lingus, Jet Airways, Air Serbia and Eithad

News of the appointment of a new general sales agent in Malta for Alitalia – now a subsidiary of UAE airline Etihad – has fuelled speculation of an imminent deal for a take-over of a substantial part of Air Malta.

World Aviation Group (WAG), which started in 1989 as a joint venture between Air Malta and Cassar Aviation Services, announced in December that it was extending its GSA representation of the Etihad Equity Partners Group, which also includes Air Berlin, Niki, and Air Serbia, and now Alitalia since a 49% equity acquisition by Etihad back in 2014.

WAG’s portfolio includes Aviation Online, which represents airlines in new markets, BPO Services, which provides back-office support for the airline industry, and Centrecom for customer care services.

An announcement that the Abu Dhabi airline, through Alitalia, will be taking over equity in the ailing Air Malta could be expected within the first quarter of 2016, when the airline announces its results for its year-end in March.

Negotiations were being conducted by airline chairman Maria Micallef and senior officials from the Office of the Prime Minister.

Under EU rules, Etihad can only acquire up to 49.9 per cent of Air Malta’s shareholding if the Maltese airline is to continue operating under a European licence. 

Air Malta is in the final year of a five-year restructuring plan that the previous government had agreed with the European Commission in 2012 in return for its approval of around €130 million in state aid.

Audited figures announced during the October meeting show that the airline posted a loss of €16.4 million for the year ending March 2015 and is set to reduce its losses to €4 million by 2016. 

Over the past five years, the carrier was forced to trim its staff, reduce its number of operating planes, and cut capacity. The plan should have seen the company return to profitability in 2015 but it has fallen way short of its restructuring targets. 

Apart from code sharing, a partnership agreement could see Air Malta gain from flying to Etihad’s Abu Dhabi hub, where the company can then transfer passengers to and from a range of destinations to which it has not previously had convenient access.

Etihad is not new to such agreements as last year it saved Alitalia from bankruptcy, reinforcing the Gulf airline’s reputation as a “rescue investor” for troubled airlines. In December 2014, it bought 49% of loss-making Alitalia in a €1.76 billion rescue plan, but demanded cuts for 2,250 jobs.

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