Alitalia Shareholders Change Statute to Help Etihad

    By Eva Palumbo and Gilles Castonguay

    Alitalia's shareholders Tuesday approved a change in the Italian airline's statutes to help Etihad Airways avoid the risk of having to buy the entire airline after making an initial investment in it.

    Alitalia shareholders voted at an extraordinary meeting in Rome to change a statute that obliges a shareholder to make an offer to buy the rest of the airline if its investment surpasses 50%, people familiar with the meeting's deliberations told MF-Dow Jones. The statute also considers a shareholder's stake to exceed that threshold if it works in concert with other shareholders.

    Abu Dhabi carrier Etihad is in talks to buy up to 49% of Alitalia.

    It won't buy more than that because Alitalia would no longer be considered a European airline by regulators and would lose its access to the region. That access is what Etihad cherishes most.

    If it were eventually to buy a stake, Etihad would want to work with Alitalia's creditors to revive the ailing airline's fortunes. But these creditors are also shareholders in the airline, so Etihad would risk running afoul of the statute if their combined stake surpassed 50%.

    Tuesday's change in the statute eliminates this risk, making it easier for Etihad and Alitalia to reach a deal.

    Another move to improve conditions for a deal was made last Friday when Alitalia agreed with labor unions to reduce the working hours of nearly 15% of its 14,000-strong staff as part of an effort to cut costs.

    The biggest obstacle to a deal, however, is Alitalia's 1 billion euro ($1.37 billion) debt. Etihad wants to restructure, but creditors are resisting.

    If Etihad reaches an agreement to take the stake in Alitalia, it would be the latest and biggest investment it has made in a European airline as part of an ambitious strategy to increase its presence in the region. The investment would provide Alitalia with a partner and funding that it needs to avoid bankruptcy.

    Italy's government favors a deal because it doesn't want to bail the airline out.

    Write to Gilles Castonguay at; Twitter: @GRCastonguay