Etihad Airways announced its purchase of a 49% stake in Alitalia on August 8, 2014. Image via eunews.

APEX Insight: In a special web series, APEX contributor Marisa Garcia takes an in-depth look at four distinct airline brand unions. Part one examines the merger of Alitalia and Etihad Airways and the challenges of marrying a cherished legacy carrier with a newer airline brand.

Alitalia and Etihad Airways have partnered through investment. In August of last year, Etihad invested €560 million for a 49 percent stake of the Italian carrier, raising equity investments of €300, with an additional €598 million in financial restructuring of short- and medium-term debt and €300 million in new loan facilities from financial institutions.

Etihad Airways CEO James Hogan

Etihad Airways CEO James Hogan (left) with Alitalia CEO Silvano Cassano (right). Photo courtesy of Alitalia

“We believe in Alitalia. It is a great brand with enormous potential. With the right level of capitalization and a strong, strategic business plan, we have confidence the airline can be turned around and repositioned as a premium global airline once again,” said Etihad Airways president and CEO, James Hogan at the time of the announcement. “Alitalia is the perfect ambassador for Italy and all that it represents. As we revitalize the brand, the airline will increasingly embody all that we recognize as quintessentially Italian – the history, culture, food and fashion. It must be an airline of which Italians can be proud.”

But the investment to save beleaguered Alitalia took more than an infusion of cash and a fresh round of financing. Long-term success hinged on a restructuring of Italy’s flagship carrier, and a proper blend of brand collaboration between the two carriers.

Harmonizing Alitalia and Etihad’s brands required careful coordination as the two carriers had very different histories. Where Alitalia has a long legacy as a cherished flag carrier, Etihad Airways is a relative newcomer to aviation.

Etihad Airways has defined its brand quickly and effectively, building associations with luxury and comfort through a massive investment in products and services under its “Reimagined” brand campaign. But this “new and better from the ground up” strategy did not as readily fit Alitalia’s brand image. “Alitalia needed an evolutionary approach to ensure its iconic status was evolving to represent a story well-known and loved: Italy,” explains Peter Knapp, global creative officer for Landor Associates, which consults both airlines. “Etihad had a new story to tell to the world: Abu Dhabi, hence a more revolutionary approach. Each project, each brand is different and demands its own thoughtful solution to ensure success.”

While everything from the iconography to the in-flight product for Etihad’s “Reimagined” brand can tell a fresh new story, it was important that Alitalia’s refreshed brand focus instead on continuity.     

“Etihad was specifically different as it faced a very different challenge,” Knapp says. “Etihad represents the new and remarkable destination of Abu Dhabi as its development into a major new global city now takes speed. The story of the city is now told in the design and the livery by at once representing the beauty of the dunes, a respectful reference to Arabic design motifs and aesthetics and a new dynamic series of buildings via the ‘facet’ design. The previous livery for Etihad did not express this story so we needed a radical approach to tell the new story as dramatically as we could.”

The approach to Alitalia was entirely different. “The design for Alitalia is a national and global icon in the world of aviation,” Knapp explains.“Our brand and design work is centered on celebrating all the things that people love about Italy, and as such, Alitalia plays a prominent part in that. We wanted people to recognize that you experience Italy when you experience Alitalia hence the decades of recognition that the livery has needed to trigger these feelings.”

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A more contemporary logo and brand was designed for Alitalia by Landor Associates

At the same time, the merger presented an opportunity to modernize Alitalia’s brand, hence the sophisticated design detail in the “A.” “The bigger, more experiential change is on the inside where you get a much stronger sense of a new sophisticated Italy in all the cabins. The colors, textures and materials are more like an Italian fashion brand and feel both warm and stylish,” Knapp adds.

Indeed, both airlines communicated their core values through their brand initiatives, and better defined their common elements through updated looks.

That Etihad, after investing to save the troubled Italian carrier, tempered its fine-tuning of the Alitalia brand, demonstrates a confident vision of both carriers co-existing as separate but equal partners. It also proves that the leaders of these airlines understand that “brand” isn’t just a logo, but a valuable asset.

Our industry has evolved through a combination of effective alliances, partnerships, and consolidations via mergers and acquisitions. Bringing companies together, regardless of the type of union, presents unique organizational and brand challenges. To better understand these challenges, and how they can be addressed, we assembled a roundtable of the industry’s leading brand gurus for the feature, “The Brands That Bond Us,” coming out soon in The Design Issue.