Etihad Airways has received merger clearance from the European Commission to proceed with buying a 49 per cent stake in Italian airline Alitalia.
The merger clearance means the Gulf airline can now invest €560 million (£448 million) to save Alitalia from bankruptcy, as laid out in a deal signed in the summer.
The European Commission confirmed the partnership complies with the European regulations on competition.
James Hogan, Etihad's president and CEO, said: "We are delighted to be able to move forward with this process and look forward to a positive outcome and the final conclusion of our transaction with Alitalia.
"An equity investment in Alitalia will be beneficial not only for the both airlines, but, more importantly, it will give more choice and broader travel opportunities to business and leisure travellers into and out of Italy."
Alitalia CEO Gabriele del Torchio, said: "This is an excellent outcome for Alitalia. This investment will provide financial stability and a foundation for impressive long-term growth for the Company and for the travel and tourism industry in Italy, in which Alitalia is a fundamental player.
"The decision by the EU approves the largest ever foreign investment in Alitalia and demonstrates huge confidence in the future of the national carrier."