The EU executive on Friday approved a June deal between the two national carriers, under which Etihad would acquire a 49-percent stake in Alitalia.

Economists said the merger would reinforce Etihad's presence in Europe, where the airline already owned minority stakes in Air Berlin, Aer Lingus and Air Serbia.

For Italian authorities the deal offered fresh hope that Alitalia's long-standing dance with the brink of bankruptcy would finally be over.

Fair competition not jeopardized

Alitalia is a member of the SkyTeam Airline Alliance and transported 24 million passengers last year, but it hasn't turned a profit since 2002.

Officials of Italy's flag carrier indicated that Etihad would invest 560 million euros ($719 million) to get the ailing airline off the ground again. But they also suggested restructuring would involve the slashing of over 2,200 jobs in a bid to save costs, making the carrier more competitive.

The European Commission had initially voiced concerns over the merger's potential effects on the Rome-Belgrade route, fearing that a monopoly on flights between the two cities could lead to higher prices and a loss of service quality for passengers.

But those concerns were removed, when Etihad and Alitalia committed to releasing "up to two daily slot pairs for the route to one or more interested new entrants."

hg/el (Reuters, dpa)