Etihad Airways (EY, Abu Dhabi International) management has reportedly put off a tentative deal with Alitalia (AZA, Rome Fiumicino) until the latter resolves issues relating to overstaffing and outstanding debts.
Anonymous sources close to the talks told Reuters newswire that the Emirati carrier has demanded that 1'000 Alitalia with permanent contracts be let go, while the remaining 1'000 be put on temporary layoff schemes partially supported by the state.
“It’s part of negotiations… It in no way means the deal is over. They have just put tough conditions on the deal,” a United Arab Emirates-based source told the newswire. “Things are a bit stalled mainly because of job-related problems. But there’s too much at stake… a solution will be found,” another source close to the matter said.
The airline has steadfastly refused to negotiate with Italy's trade unions which have themselves threatened to topple any government which moves to cut jobs.
Sources in Rome have optimistically stated that the issue of job cuts though tricky, was not insurmountable.
Another obstacle in the talks has been Alitalia's massive EUR800million debt overhang which Abu Dhabi wants settled. Etihad is asking Alitalia's creditors, among which are shreholders Intesa Sanpaolo bank and UniCredit bank, to restructure EUR400million of debt.
The same issue scuppered talks between the Italians and Air France (AF, Paris CDG) and KLM Royal Dutch Airlines (KL, Amsterdam Schiphol) last year.
One of the options on the table envisaged postponing the deadline for debt repayments or a debt-to-equity conversion.
Once all conditions are met and an agreement has been reached, Etihad will allocate EUR500million (USD692.7million) for the deal of which EUR350million would go towards securing a 49% stake in Alitalia.
