Name

Professor

Business Essay

Date

Airlines sets Deadline on Talks with Italia (International Business)

Significantly, Etihad airways, the national airline of the UAE, has had a lot of success over the years mainly through expansions: for instance, in 2012, it expanded its commercial team to Saudi Arabia and also added new sale positions in two major offices (new appointments were Aiyaz Khot as manager of Central Province, based in Riyadh and Imran Rakhangi as manager of Western Province, based in Jeddah).

This was a core step for Etihad as one of the front-line officials of the airline put it out that the country was a key part of the airway’s networks which was true since Saudi Arabia’s sales force reflected the developing significance of that market for Etihad airways. Definitely, the year 2012 was significant to Etihad airways since shortly after the Saudi Arabia expansion the great experience from the two appointed managers who had extensive knowledge in sales and business analysis broadly increased the sales in the western and central provinces of nation.

The main point here is that Etihad has made grave impact in the airlines industry and the Alitalia investment should not be any different from the rest of the commercial expansions and stakes that Etihad has been able to acquire over time (Clark 1). Reflectively, Etihad bought a twenty four percent stake in India’s Jet Airways (JETIN) and a forty nine percent stake in Air Serbia; additionally, the carrier increased its stake in Virgin Australia (VAH) by ten percent, holds a twenty nine percent stake in Air Berlin, 40 percent of Air Seychelles, three percent of HYPERLINK “http://www.bloomberg.com/quote/AERL:ID” Aer Lingus (AERL), and recently added a stake in a Swiss regional carrier.

Basically, Etihad’s investment on Alitalia will be a mark of ‘presence’ on the European segment of the business even though it has stakes in Air Berlin and Swiss-based airline a full service legacy carrier would be great for the airway’s reputation: moreover, Alitalia has been trying to recover from some major losses that caused the airline greatly depicting a negative picture to the international market (Kamel 1). Initially, Air France owned about twenty five percent of Alitalia and they had a good thing going on until early last year when AF declined to invest further in the airline after Italia wanted to raise funds under the notion that the carrier belonging to the Italian sector was not yet per to its conditions.

After Etihad made its announcement about investing in Alitalia, Air France refrained from commenting on the matter which could mean a lot of things; for instance, they might be of the idea that it is a bad corporate move that they would not recommend but they don’t want to get in the way or AF might be feeling inferior since Etihad is willing to take on a task that the AF could not counter. All the same, the decision and aim of Etihad still remains at light though there is no way that such Etihad, an internationally recognized airline could enter into such a deal without having done more than enough homework. James Hogan, the Chief Executive of Etihad backed this notion by saying that as a successful corporation, they do not invest for the sake of doing it and only step in when they are sure of a solution; additionally, Etihad has claimed to have already devised ways that they will apply and enable Alitalia to get back on their feet.

Conversely, Alitalia also needs the investment even though they appear to be reluctant on the matter but this is mainly as a result of the management avoiding more embarrassment; all the same, Alitalia’s despair can be seen from their uptight compliance with Etihad’s management (Clark 1). Leave alone Alitalia itself, everyone else supports Etihad in their want for investment; resultantly, Abu Dhabi and his government, who helped prop up Alitalia have promised to step aside and let things go according to plan –‘they would not want to be imposters of the agreement in any way’ (Kamel 1) In another situation, a partner at Clyde and Co was also of the idea that the investment would be a breakthrough for Alitalia giving an illustration of the company being given ‘a shot’ after struggling for a significant period of time; sincerely, Etihad’s best and proven practices plus the three hundred million Euros will create a platform for the airline’s development and its future.

Generally, buying a stake in Alitalia will enable Etihad’s management tap a major Economy in western European that has been drawing major airlines like Emirates and low cost carrier EZI and at the same time they will seek to capitalize on the local airline’s afflictions.

Works Cited

Clark, Nicola. Airline Sets Deadline on Talks with Alitalia: International Business/ The New York Times. 2014. Web, February 3, 2014 < HYPERLINK “http://www.nytimes.com/2014/02/03/business/international/etihad-sets-deadline-on-investment-talks-with-alitalia.html?ref=international&_r=0” http://www.nytimes.com/2014/02/03/business/international/etihad-sets-deadline-on-investment-talks-with-alitalia.html?ref=international&_r=0 >

Kamel, Deena. Etihad Sets Deadline to Decide on Alitalia Investment: Bloomberg News. 2014. Web, February 3, 2014 < HYPERLINK “http://www.bloomberg.com/news/2014-02-02/etihad-sets-30-day-deadline-to-decide-on-investment-in-alitalia.html” http://www.bloomberg.com/news/2014-02-02/etihad-sets-30-day-deadline-to-decide-on-investment-in-alitalia.html >