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Etihad Sets Conditions on Reaching Alitalia Deal, Minister Says

April 17 (Bloomberg) -- Alitalia SpA received a letter from Etihad Airways outlining conditions that need to be met before it will invest in the airline, Italian Transport Minister Maurizio Lupi said today.

“The Italian government favors a deal” between the companies, Lupi told lawmakers in parliament during question time. He didn’t give any details about the content of the letter sent yesterday. Lupi was quoted by Italian news agency Ansa as telling reporters the negotiations were continuing.

Earlier today, newspaper Il Messaggero reported that Etihad might back out of the investment in Alitalia because it had not received enough guarantees from the Italian government on requested job cuts, changes to routes and debt restructuring. Alitalia declined to comment.

Alitalia has been seeking a new investor after Air France KLM Group didn’t participate in last year’s capital increase, ceding its role as the largest shareholder.

Etihad, the smallest of the major three middle East carriers, confirmed in December that it’s in talks with Alitalia, and the company said in February that it would decide within a month whether to invest.

To contact the reporter on this story: Alessandra Migliaccio in Rome at amigliaccio@bloomberg.net

To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Dan Liefgreen, Marco Bertacche

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