Etihad Airways has agreed to sell its 40 per cent stake in Air Seychelles for just US$1 and write off more than $60 million in debt owed by the government of Seychelles. The decision to rid itself of Air Seychelles at any cost is part of Etihad’s efforts to cut all ties with a disastrous equity investment scheme that plunged the Abu Dhabi-based airline into a $1.87 billion loss in 2016.
Etihad acquired its stake in Air Seychelles in 2012 and the Seychelles government retained the remaining 60 per cent. Thursday’s deal will see the Seychelles government take full ownership of the national flag carrier at a steep discount.
Air Seychelles had owed Etihad $72.3 million but the Persian Gulf carrier has agreed to write off 70 per cent of the owed debt. Repayment of the remaining debt won’t start until 2022, although the Seychelles government is still in talks with the Trade Development Bank for a loan to cover the costs of acquiring the airline.
If approved, Etihad’s appointed chief executive and chief financial officer will step down on June 30.
Etihad’s former leadership team had attempted to build a fourth global airline alliance to supercharge its own rapid growth plans that would see the carrier go head to head with regional giants like Emirates and Qatar Airways.
Back by the government of Abu Dhabi, the airline snapped up minority stakes in a slew of faltering carriers including Italy’s debt-laden flag carrier Alitalia, loss-making German discounter airberlin and India’s popular but financially beleaguered Jet Airways.
Etihad injected tens of millions of dollars and parachuted in executives in a huge but ultimately unsuccessful gamble to turn around the fortunes of these airlines.
The airline is now on a mission to turn its own fortunes around by rightsizing itself into a much smaller boutique airline. Chief executive Tony Douglas remains hopeful that even with the pandemic weighing down on the business, Etihad can turn a profit in the next couple of years.
Douglas has already written off Etihad’s fleet of Airbus A380’s as part of the airline’s post-pandemic business plan and the airline’s Boeing 777-300’s will also be scrapped by the end of the year.
Etihad still retains a huge order book with aircraft manufacturers Boeing and Airbus, although these are likely to significantly trimmed back over the coming years.
TOTH: One Mile at a Time
