While Etihad Airways let Alitalia slide into bankruptcy after workers spurned a restructuring plan, the Persian Gulf carrier is showing more patience with its other ailing European asset.
Hidden on page 154 of Air Berlin Plc’s annual report, published hours after Alitalia’s insolvency filing, was the revelation that Abu Dhabi-based Etihad had agreed to provide the German company with financial support for at least another 18 months, including €350 million ($382 million) of new funds, Bloomberg reported.
That extra injection takes Etihad’s total exposure to Air Berlin close to €2 billion and suggests the Mideast company is not yet ready to abandon a partner that sits at the heart of a so-called Equity Alliance strategy that saw it build up minority holdings in carriers spanning Ireland to Australia.
The fresh funding—combined with Etihad’s assertion that “what has happened at Alitalia does not affect how we view any of our other equity investments”—represent some show of faith in Air Berlin, which has racked up net losses of €2.7 billion in little over six years and has a net debt of €1.2 billion.
That’s especially so since James Hogan, Etihad’s chief executive officer since 2006, is preparing to depart in the second half, presenting an opportunity for a clean break in the group’s strategic approach.
“It’s imperative that Etihad defines a clear roadmap,” said aviation specialist Mark Martin who heads the Dubai-based Martin Consultancy.
“The time has come for Etihad to face tough decisions, either to stop the financial bleed or stay invested with a clear return-on-investment ultimatum.”
That means deciding which assets have value and which are simply deadweight.
Add new comment
Read our comment policy before posting your viewpoints