As per a report in the Australian newspaper Sydney Morning Herald, Abu-Dhabi based Etihad Airways PJSC received massive financial support from the royal family ruling Abu Dhabi which also owns the airline via the state. This contradicts long standing denials.
Fairfax Media has obtained confidential documents, prepared for potential financiers, showing the airline had access to over $3 billion (Rs.18,000 crore) in a secret, interest-free loan from the royal family, which does not require re-payment till 2027.
Of particular interest to India, in a slide titled “What Etihad needs to win?” the airline seek a full range of subsidies from its shareholder the Abu Dhabi government i.e. the royal family, including protection form low cost airlines, and “approval of acquisition of targets passenger air transport” which includes Etihad’s 24 percent stake investment in Jet Airways.
The report goes to highlight how in Abu Dhabi the royal family is the government and by extension various state owned companies, including Etihad, are essentially owned by the royal family of the emirate.
A review prepared by management consultants Booz & Co in 2010, which was presented to Crown Prince Mohammed bin Zayed Al Nahyan, shows Etihad used special deductions to post its first profit, of $US14 million, in February 2012.
The review was shared among the Prince’s executive council of advisers.
Another document, from 2011, was presented to potential lenders during private meetings in New York, London and Sydney and has since circulated among the management ranks of Etihad’s competitors, such as Qantas and Emirates. Industry sources provided the documents to the Financial Review.
A PowerPoint slide entitled “Equity and Shareholder’s Loan” says: “The shareholder has provided significant loan facility for aircraft deposits and working capital – Subordinated, interest free and no repayments until 2027”.
Another slide presented to Abu Dhabi’s ruler deals with the airline’s “Public Service Obligations”, which include unprofitable routes, training and employing Emirati citizens and marketing sponsorships.
A footnote to the public service obligations [PSO] slide says that “Executive Council covers Man City” – an apparent reference to the Abu Dhabi government. Etihad is the major sponsor of English Premier League team Manchester City, owned by the Crown Prince’s brother Sheikh Mansour bin Zayed Al Nahyan, and paid a record £400 million ($731.8 million) deal for naming rights to the team shirt and stadium.
You can read the full SMH report here, and download the documents obtained by Fairfax Media in PDF format here.What is interesting to read is the fact that senior management of competitor airlines were well aware of these details. Surely they would have shared this will their respective governments.
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