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Asia Today ISSN 1861-4604 Monday, May 28, 2018

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Etihad Airways raises stake in Aer Lingus to 4.1%

Etihad had increased its stake to 22 million shares

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Etihad Airways has raised its stake in Aer Lingus to 4.1 per cent as the Abu Dhabi airline continues to invest in foreign carriers. 

“Etihad Airways’ stake in Aer Lingus now exceeds 4 per cent following the acquisition last week of further shares on the open market,” Etihad confirmed in an email to The National yesterday. 

Etihad has developed large virtual networks and has bought into carriers, but the Aer Lingus deal could come to make the UK/Ireland the highest strategic saturation point for the Middle East network carriers.

Aer Lingus, in a statement on its website, said Etihad had increased its stake to 22 million shares, or 4.1 per cent of total shares, from 16.1 million.

Although the stake will not give Etihad much control in Aer Lingus, it could be a stepping stone for a bigger holding – if Ryanair eventually disposes of its large stake.

“The stake increase may signal Etihad’s long-term plan to have a Dublin-based operation,” said Keith McMullan, the managing partner at UK-based Aviation Strategy.

“The problem is Ryanair owns a significant stake in Aer Lingus. A European commission ordered Ryanair to reduce its stake in Aer Lingus for competition purposes, but until the legal position is resolved, it will be difficult for Etihad to raise its stake in Aer Lingus.”

On March 7, the UK Competition Appeal Tribunal rejected an appeal by Ryanair, a budget carrier, to keep its 29.7 per cent stake in Aer Lingus.

Aer Lingus posted an operating profit of €61.1 million (Dh312m) last year, versus €69.1m the year before.

Christoph Mueller, its chief executive, told the Financial Times last month that the company would use €420m to seek merger and acquisition opportunities. He said that revenue last year from the Irish carrier’s long-haul flights had increased by 11 per cent and its passenger numbers grew by 12 per cent.

Etihad’s growth strategy has relied heavily on expanding its route network through “equity alliances” in which it invests in carriers in strategically important regions. Last year, Etihad grew its equity alliance to seven carriers – Aer Lingus, airberlin, Air Serbia, Air Seychelles, Virgin Australia, India’s Jet Airways and Switzerland’s Etihad Regional, which was formerly known as Darwin Airline.

Etihad credits its strategy of equity alliance for the company’s 48 per cent increase in profit last year to US$62m. Sales grew 27 per cent to $6.1 billion. Partnership revenues rose 30 per cent to $820m, representing 21 per cent of passenger revenues.

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