An Etihad Airways Airbus A380 coming in to land at Heathrow airport in London, UK on January 19, … [+]
Abu Dhabi-based Etihad Airways is facing further challenges with its now-abandoned strategy of investing in other airlines, with the turmoil due to the coronavirus pandemic causing difficulties at three of the carriers it holds stakes in.
Over the summer Air Serbia requested an 82% cut in the debts it owes to Etihad Airways Partners (EA Partners), two troubled special purpose vehicles which have lent money to a number of airlines that Etihad has links to. The Serbian request was rejected by EA Partners as “unacceptable” and talks are now said to be taking place between the Belgrade government and Air Serbia’s creditors to find a way forward.
The authorities have indicated their willingness to inject more capital into the national carrier and are encouraging Etihad to do the same. Etihad holds a 49% stake in the Balkan airline, but it is not clear if it would be willing to make any further investments.
Like all airlines these days, Etihad is finding trading conditions tough. The grounding of most of its fleet due to the coronavirus pandemic meant passenger numbers fell 99% year-on-year in the second quarter of this year. Operating losses for the period rose to $758 million. It recently asked cabin crew to take unpaid leave of between 10 days and six months, according to a Reuters report.
Virgin loss
Adding to its woes, Etihad now looks likely to lose its entire investment in Virgin Australia, after administrators Deloitte recommended a plan which would see the Australian airline’s creditors paid up to 13 cents in the dollar but leave shareholders with “no return.”
A meeting of creditors is due at the end of next week to consider the proposal from private equity firm Bain Capital.
Virgin Australia Boeing 737s sit empty on the tarmac at Sydney Airport on August 05, 2020 in Sydney, … [+]
There is also trouble at Air Seychelles, another airline which Etihad took a stake in as part of its previous “equity alliance” strategy of building up stakes in smaller carriers around the world. Etihad bought a 40% stake in the airline in 2012. Air Seychelles has also borrowed money from EA Partners which it is now struggling to repay and last month indicated it wanted to enter talks about the debt.
Etihad has previously seen three other airlines it had invested in go into insolvency: Germany’s Air Berlin, Italy’s Alitalia and India’s Jet Airways.
Despite all these troubles, Etihad is still being touted as a potential investor in other struggling airlines. Indian media have named it as a potential bidder for Air India, alongside the likes of Germany’s Lufthansa and Singapore Airlines.
An Air Serbia Airbus A330-200 aircraft on its final approach into New York’s John F. Kennedy … [+]
