Italy and UAE strengthen economic ties

ADAM SCHRECK
Last updated 09:00 03/02/2014

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The United Arab Emirates' national airline suggested on Sunday it is nearing a decision on taking a stake in struggling Italian carrier Alitalia as a high-level Italian delegation promoted investment opportunities during a visit to the Mideast country.

The two-day visit led by Italian Premier Enrico Letta is aimed at boosting bilateral ties and strengthening economic cooperation with the oil-rich federation.

It is the first leg of a Gulf tour that will also include stops in Qatar and Kuwait.

Letta told reporters at the opulent Emirates Palace hotel in the UAE capital Abu Dhabi that his visit touched on discussions of the political situation in Iran, Egypt and Syria.

But business was a key focus, too, as Italy struggles to revive its economy and create jobs.

"The economic part of the visit was for me one of the most important parts," Letta said.

The UAE, a leading OPEC oil producer, has shown an interest in deepening its investments in Italy.

Abu Dhabi's Aabar Investments paid US$2.2 billion ($2.7 billion) in 2010 for nearly 5 per cent Unicredit, Italy's largest bank.

Alitalia's chief executive was quoted as saying that there is ''strong interest on both sides" for a deal.

''What happened today is another important step toward building a solid and competitive Alitalia," chief executive Gabriele Del Torchio was quoted as saying the Italian news agency ANSA.

''A solid and complementary international partner is considered universally indispensable to make Alitalia competitive," Del Torchio was further quoted as saying.

Officials on Sunday signed a number of accords on business deals ranging from energy projects to tourism and fitness centers.

They also left Abu Dhabi hopeful that progress is being made in ongoing talks between Abu Dhabi's Etihad Airways and debt-saddled Italian airline Alitalia.

The airlines said on Sunday that they have "entered the final phase of a due diligence process about a possible investment" into the Italian carrier.

They will work toward developing a common strategy over the next 30 days "which meets the objectives of both parties," though they acknowledged that hurdles remain.

"Any issues that may prevent the establishment of an appropriate business plan will have to be resolved to ensure the plan can be implemented to move Alitalia to sustainable profitability," the airlines said.

They gave no indication of how big of a stake Etihad would consider or how much it might pay.

Letta refused to be drawn on the subject either, but said he was hopeful about the talks.

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"We need to have a strategic investment for the future," Letta said, leaving open the possibility of a management reshuffle at Alitalia should Etihad's bid prove successful.

"We are very much flexible in the discussions we are having," he said.

Alitalia's board in October approved plans for a €300 million euro ($501 million) capital increase as part of a broader rescue plan to help it stave off bankruptcy.

But the money-losing airline still faces strong financial headwinds after one of its main shareholders, Air France-KLM, said it would not join in the money-raising effort.

Letta began his visit Saturday with talks with the Abu Dhabi crown prince, Sheik Mohammed bin Zayed bin Sultan Al Nahyan.

The two men discussed areas of "joint cooperation in areas of economy, trade and investment," according to Emirati state news agency WAM.

The crown prince plays a key role in the UAE leadership. He is expected to eventually succeed his half-brother, the Emirati president, Sheik Khalifa bin Zayed Al Nahyan, who is recovering from a recent stroke.

Letta also met the UAE prime minister, Dubai ruler Sheik Mohammed bin Rashid Al Maktoum, and other officials.

The Italian premier said Dubai, which recently won the right to host the World Expo in 2020, could benefit from Italy's experience in preparing to host the fair in Milan next year by "avoiding the mistakes that we did."

Dubai is the Middle East's commercial hub. Its shopping malls are filled with Italian luxury brands, and Italian-made Ferraris and Lamborghinis frequently cruise Emirati streets.

The world's tallest building in Dubai features a luxury hotel crafted by Italian designer Giorgio Armani.

The countries have been working to forge other ties too. In December, the Italian aircraft carrier Cavour paid a visit to Abu Dhabi during an exhibition of Italian companies.

- AP

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