Alitalia, Air Malta deal ‘not dead’

While signs indicate that the Air Malta-Alitalia negotiations are not reaching Prime Minister Joseph Muscat's expectations, sources have said the 'discussions are ongoing'

Etihad’s chairman and CEO James Hogan said he was “disappointed” with the Italian government
Etihad’s chairman and CEO James Hogan said he was “disappointed” with the Italian government

Although Prime Minister Joseph Muscat has made it abundantly clear that he is close to pulling the plug on the deal to sell 49% of Air Malta to Alitalia, sources close to the Italian airline and Air Malta insist that “discussions are ongoing”.

In a clear sign that negotiations with Alitalia were not reaching his expectations, Muscat recently said the government would not sign a deal that is not beneficial to Air Malta.

However, sources close to the airlines are adamant that the deal is not dead and Alitalia sources told MaltaToday that “discussions are ongoing”.

Air Malta has been undergoing a restructuring process costing some €230 million after it was given the green light for state aid under strict European Commission rules and with the airline’s financial sustainability in serious doubt, the part-privatisation of Air Malta is a priority for Muscat’s government. 

However, as reported in MaltaToday Midweek, Alitalia itself is in a spot of bother as Abu Dhabi-based airline Etihad, which owns 49% of Alitalia is threatening to withdraw its investment if the Italian government does not honour its promises. 

Various reports in the Italian media say that Etihad is “threatening” to withdraw its investment after a mere 18 months, with Alitalia currently losing €500,000 a day. 

In an interview with Italian daily newspaper Il Corriere Della Sera, Etihad’s chairman and CEO James Hogan said he was “disappointed” with the Italian government led by Matteo Renzi because “a number of the condition precedents haven’t been met.”  

While insisting that the Abu Dhabi airline is committed to Alitalia he warned that the government should do its part. “We’re committed to the partnership, to tackle these issues, but frankly as an investor we need Italy to support us.” 

Earlier this year, Alitalia signed a memorandum of understanding with the Maltese government over the possible acquisition of 49% of Air Malta by the Italian airline.

MaltaToday is informed that Alitalia are due to take a final decision on the acquisition this month following a rigorous due diligence exercise. 

But if Etihad pull out of Alitalia, it would definitely spell the end of Alitalia’s interest in Air Malta because the Italian airline’s future will be on the line.