Etihad says big three US airlines received $70bn in subsidies

The Abu Dhabi-based carrier has today released the findings of a new report as the Open Skies row rumbles on.

Etihad Airways, along with Emirates and Qatar Airways, is alleged by US carriers to have between them received more than $42bn in state subsidies. Silvia Razgova / The National
Powered by automated translation

Etihad Airways has hit back at US rivals with a report saying North America’s big three carriers netted more than US$70 billion in government and court-sanctioned benefits over the past 15 years.

The Abu Dhabi-based carrier has released the findings of a new report that claims Delta Air Lines, United Airlines and American Airlines Group have received benefits valued at $71.48bn, more than $70bn of which has been received since 2000.

Such benefits have had the effect of “enabling the country’s three largest carriers to transition from the verge of bankruptcy to today’s industry leaders, each achieving a multibillion dollar profit”, said Etihad.

The publication of the report, compiled by the consultants The Risk Advisory Group, comes in response to a report released a little more than two months ago by the Partnership for Open & Fair Skies, a lobbying group backed by the three US carriers and several US-based unions.

The group claimed that Qatar Airways, Etihad Airways and Emirates had between them received more than $42bn in state subsidies.

The three US airlines have asked the administration of the US president, Barack Obama, to not allow Arabian Gulf carriers to add more routes into the US, pending a review of open skies agreements.

“We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts,” said Etihad’s general counsel and company secretary, Jim Callaghan.

“We simply wish to highlight the fact that US carriers have been benefiting and continue to benefit from a highly favourable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes and various other benefits.

“These benefits, which are generally only available to US carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”

Mr Callaghan described the figures, obtained from public records and statements, as “conservative, quantifiable and credible”.

The findings of the report echo comments made by the Emirates chief executive Tim Clark this week.

“There have been several examples of US airlines in Chapter 11 bankruptcy, which obviously has an effect on their business and the rights of creditors, employees and pension obligations,” Mr Clark told The National.

“Some of them were able to come out of Chapter 11 and to carry forward losses against tax, which makes their complaints about the no-tax regime in the UAE illuminating. What’s the pot doing calling the kettle black?”

Jill Zuckman, the spokesperson for the Partnership for Open & Fair Skies, said in a statement that the Chapter 11 process is not a subsidy. “US taxpayers are not liable for any restructuring of airline pension plans in bankruptcy,” she added.

Follow The National's Business section on Twitter