Rome, June 25 - Alitalia and Etihad on Wednesday confirmed that they have reached a deal that will see the Abu Dhabi-based company acquire a 49% stake in the struggling Italian airline, a joint statement said. "Alitalia and Etihad Airways today confirmed that they have agreed the principal terms and conditions of a proposed transaction whereby Etihad Airways will acquire a 49% equity stake in Alitalia," the statement read.

"The airlines will now move to finalise the transactional documents, that will include the agreed upon conditions, as soon as possible. "The conclusion of the investment is subject to final regulatory approvals".

The statement did not say how much Etihad are investing, but media reports say the UAE company is forking out 560 million euros for the 49% stake.

The deal comes with stiff conditions, including 2,251 job cuts that the government and Alitalia are in talks with trade unions over. So far unions have refused to accept the permanent job losses, which would take a large chunk out of the current workforce of 14,000 employees at Alitalia, which has been struggling for years to restructure and remain competitive.

The deal also requires some restructuring of Alitalia's debt, estimated by some at as much as 800 million euros.

The large stake to be taken by Etihad had triggered concerns with the European Commission, which warned Italian authorities to ensure the United Arab Emirates carrier does not gain a majority holding.

EC rules require that majority ownership of European airlines remains in European hands, and the Italian government has reassured the EC that those rules were being obeyed.

The tie-up would allow Etihad to expand its roots in the lucrative European market while giving new life to Alitalia, which was subject to a government-led bailout last fall - only the latest in a series of restructuring attempts by the carrier as it struggles to remain competitive.