SINGAPORE: Etihad's Hogan explains interest in Alitalia

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The attractiveness of the Italian market and the ability to offer more connections with its partner carriers are the main drivers behind Etihad Airways’ recent interest in buying into Alitalia, according to its chief executive James Hogan.

He told reporters at a media briefing on the sidelines of the Singapore air show that Italy is a “great market” with traffic flows that would complement the combined network of Etihad and its partners.

“When we look at the network fit for us and Air Berlin, that’s very attractive for how Airberlin could work with Alitalia and also Air France-KLM,” Hogan adds.

Air France-KLM holds a 7% stake in Alitalia, and Hogan says that Etihad would be open to working with the Franco-Dutch company as a fellow shareholder if it does take a stake in the struggling Italian carrier.

Etihad confirmed on 3 February that it has started a 30 day due diligence process on a possible investment in Alitalia. Since then, the airline has had a team in Rome working alongside Alitalia’s management to come up with a restructuring plan, and it has also had talks with the airline’s banks.

Hogan also says that the investment decision will ultimately rest on the plans that Alitalia’s management can make to restructure it.

“I won’t do anything that takes us off track at Etihad,” Hogan says. “If we come to an agreement, it will be an Alitalia plan with us as partners, and we have to be convinced whatever we do with Alitalia will move it back to profitability.”

Despite its poor track record, Hogan expressed some confidence in Alitalia’s management team.

“When you’re working from crisis to crisis, it’s tough to focus on a strategy, so what’s important to me is if we do invest we can stabilise the business, we can work with the airline management team and have a strong strategy moving forward.”

Despite his positive attitude towards the prospective investment, Hogan notes that there is still work to be done before it can make a final investment decision.

“At this stage we are still in due diligence and I can’t say whether we’re going to complete a deal at this stage.”