Etihad and Alitalia airlines in 'final phase' of investment talks

A picture of an Alitalia airplane wing

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Etihad Airways and Alitalia are close to agreeing an investment by the Abu Dhabi carrier in the troubled Italian airline, the companies said on Sunday.

The airlines said they are in the "final phase" of talks, which may take another 30 days to complete.

Neither side disclosed the size of the possible investment, but there have been reports that the fast-expanding Gulf airline could take up to 40%.

Etihad has taken stakes in Air Berlin, Aer Lingus, and Virgin Australia.

A deal would give Etihad a stake in one of Europe's biggest travel markets.

Alitalia flies about 25 million passengers a year, but is weighed down by debts of about 800m euros (£656m) and Etihad could provide a welcome injection of money.

The Italian airline, which had to be bailed out by the government, employs about 14,000 staff and is regarded as one of the country's more important business assets.

Alitalia chief executive Gabriele Del Torchio said on Sunday that a deal would be "an important step in creating a solid and competitive Alitalia".

Giorgio Squinzi, head of Italy's main employers' group, Confindustria, also welcomed the news. "A strategic alliance with a strong group that is willing to invest and does not sideline our country is a positive development," he said.

Last October, Alitalia approved plans for a 300m-euro capital increase as part of a strategy to fend off bankruptcy.

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