By Anil Bhoyrul
Move was ‘right deal at the right price’, says CEO of Abu Dhabi-backed carrier
Etihad Airways, Abu Dhabi’s state-backed airline, said Monday it will pay €72.9m ($94.5m) to increase its stake in Air Berlin to 29.2 percent, making it the airline’s largest single shareholder.
“The deal is a game-changer for us, absolutely a game-changer,” Etihad Airways CEO James Hogan told Arabian Business on Monday. “This gives us access into Europe, especially the very lucrative markets in Germany, Switzerland and Austria. It gives us access to 33 million new passengers and a real chance for global growth.
“It’s no secret we have been looking for this kind of strategic move for some time, and we felt this was the right deal for us at the right price.”
The agreement will see the two carriers service 239 destinations and requires Air Berlin to shift its Middle East operations for Dubai to Abu Dhabi to link to Etihad’s network.
Etihad will offer codeshare tickets on 35 of Air Berlin’s 171 destinations and Air Berlin will sell seats on 24 of Etihad’s 82 routes. Further codesharing is planned, the airlines said.
Loss-making Air Berlin has seen a troubled year, with chief executive Joachim Hunold stepping down in August after failing to deliver a profit for several years. The carrier has cut unprofitable routes and pushed back aircraft orders in a bid to stem its losses.
Despite this, Hogan described the carrier as a “very solid company”.
“If you just look at some of basic numbers – between us we now will carry more than 40 million passengers a year, have 233 planes and employ 18,000 people,” he said. “That equates to $9bn a year in revenues. We also think that each airline could achieve incremental revenues of between €35m and €40m just in the first year.”
Etihad in July reported a 28 percent rise in revenue to $1.72bn for the first half of 2011, putting it on target to break even this year. Hogan told Arabian Business that target was “still on track”.
Etihad has also been linked in recent media reports to stake talks for Ireland’s Aer Lingus and British Midland International (BMI), spurring speculation the carrier plans to use tie-ups to expand its global reach and bolster revenues.
“We have always said that where there is an agreement that makes sense, we will look at it. I think deals like this are great for the European market and also great for Abu Dhabi. We will have to wait and see what else happens in the future but I am very confident of our position going into 2012,” Hogan said.
Etihad this month ordered 10 Boeing 787-9s valued at $2.3bn at list prices in a deal that made it the largest operator of the Dreamliner. The UAE flag carrier also ordered two freighter versions of the 777 model for its cargo operations, taking the value of the deal at list prices to $2.8bn.
Etihad’s total stock of Dreamliners is currently 41, due for delivery in 2014 through to 2019. It also has options and purchase rights for a further 25 787s.For all the latest transport news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
Interesting to realize that this article reports a transaction value of $94.5m while news items in Germany report $255m.
German news agencies meanwhile clarified:
- $ 94.5m purchase price, plus
- $ 255m credit line