Etihad has been on a rapid buying spree in the past two and a half years. Silvia Razgova / The National
Etihad has been on a rapid buying spree in the past two and a half years. Silvia Razgova / The National

Etihad open to taking stakes in more carriers after Jat Airways deal



James Hogan, the Etihad Airways president, has suggested the carrier would consider taking further stakes in airlines as it wraps up its latest investment deal.

The Abu Dhabi airline last week announced a 49 per cent shareholding in Jat Airways, the Serbian national carrier to be renamed Air Serbia, and was given the green light by India's foreign investment promotion board to move ahead with taking a 24 per cent share of Jet Airways.

Before these investments emerged, Mr Hogan said in December that Etihad would bring its acquisition strategy to a close after the completion of two further deals. But speaking after the Jat Airways tie-up, he said it "may" pursue other stakes if the opportunity was commercially viable.

"It has got to make sense. It's got to meet our criteria," he said. "Does it link with our network? Does it have a true commercial mandate? Can we restructure so it moves to profitability? It's not a race. We get lots of opportunities and we have to review them. If they don't make sense we don't play."

Etihad has been on a rapid buying spree in the past two and a half years. In addition to last week's agreements, it owns 29.2 per cent of airberlin, 40 per cent of Air Seychelles and also has shareholdings of 10.5 per cent in Virgin Australia and 2.9 per cent in Aer Lingus.

Such investments, together with 43 codeshare agreements with other airlines, are proving an effective tool to complement organic growth in the fiercely competitive Middle East aviation market.

Mr Hogan said ensuring good chief executives were in place at the airlines it bought stakes in and parachuting in Etihad executives when needed helped to ensure the equity alliances did not drain the airline's management resources. The risk of strain on Etihad's management was one reason he had previously given for shelving the equity alliance strategy.

"We appoint our chief executives or they have good chief executives already in," he said. "We have good executives that we're able to post to these businesses, that gives us a benefit, too, as we're able to broaden their skills and experience business. But what we don't do is manage the day-to-day operations."

After being awarded five-year contracts to manage the operations of Air Serbia and Air Seychelles, Etihad appointed its own chief executives to both carriers. At airberlin it drafted in three Etihad executives to help to turn the airline around, with the staff returning to Abu Dhabi afterwards.

Mr Hogan said Etihad was keen to strengthen its shareholding in Virgin Australia. Last month it received approval from Australia's foreign investment review board to up its previous stake of 10 per cent in Virgin Australia to 19.9 per cent.

"We have a great relationship [with Virgin Australia] and they'll be in Abu Dhabi in the next 30 days and we're very keen to strengthen our position with them," he said.

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