Etihad Airways Purchases Stake in airberlin

Etihad Airways has agreed to increase its stake in airberlin, Europe’s sixth largest airline, to 29.21%, becoming airberlin’s largest single shareholder.

The strategic move connects the airlines’ extensive networks and frequent flyer programs.

“One of the key components of the new partnership is the launch of airberlin services to Abu Dhabi, which will become our new gateway to Asia and Australia,” said airberlin CEO, Hartmut Mehdorn. “The agreement with Etihad Airways will also dramatically improve the global connectivity of our customers in Germany, Switzerland, Austria, and throughout the GCC and Middle East.”

Etihad Airways Chief Executive Officer, James Hogan, said the deal was one of the most important in Etihad Airways’ history. “This new partnership expands our network reach, gives us access to 33 million new passengers, and provides us with a real opportunity for global growth. Through airberlin, we gain immediate access to a broad and complementary European market, with outstanding connectivity options for customers of both airlines.”

“We now have a portfolio of 34 quality airline partners, but this is our first equity investment in another airline. It is a sign of our confidence in airberlin’s management and in the carrier’s potential to grow with us.”

“We expect such growth will also offer a host of additional employment opportunities, both in Europe and the United Arab Emirates,” Mr. Hogan said. “Etihad Airways and the airberlin group carry a combined total of more than 40 million passengers a year, operate 233 aircraft, and employ 18,000 people. Together, the companies generate more than US$ 9 billion in revenues.”

“We estimate each airline could achieve incremental revenues of between EUR 35 million and EUR 40 million just in the first year, and we believe the partnership has enormous potential to unlock a range of efficiencies.”

Under the partnership:

* airberlin will shift its Middle East operation from Dubai to Abu Dhabi;

* airberlin will operate four A330-200 flights a week between Berlin and Abu Dhabi from 15 January 2012 - with European travellers having immediate access to a total of 29 flights a week to and through Abu Dhabi from four German hubs, with a plan to increase to 42 flights from mid-April;

* the airlines will implement an extensive codeshare agreement, with Etihad Airways codesharing on 36 of airberlin’s 171 destinations and airberlin codesharing on 24 of Etihad Airways’ 82 passenger destinations, and plan further expansion of the pool of codeshare routes;

* Etihad Airways will sign codeshare agreements with the airberlin group for all European activities including NIKI, the Austrian airline, and Belair, the Swiss airline; and

* Etihad Guest and topbonus, the airlines’ frequent flyer programs, will be integrated, enabling passengers of both airlines to ‘earn and burn’ on each other’s flights and offering reciprocal benefits - including status earning - to top tier members.

Under the agreement, Etihad Airways will have two seats on the Board of Directors of the Air Berlin PLC.

The two companies will also seek anti-trust immunity, which would allow greater coordination of route networks and of sales and marketing activities.

airberlin and Etihad Airways say they are also committed to creating a joint procurement taskforce to look for cost efficiencies across the two companies, including areas such as fleet procurement and deployment, maintenance, repair and overhaul (MRO) and general procurement.

Etihad Airways’ minority stake will consist of 27.03% from a new share issue by airberlin, funded from operational cash flow, and an existing interest of 2.99% (pre-dilution), which will amount to a total interest of 29.21%. The new shares will be issued at a price of EUR 2.31.

See recent travel news from: Travel News Asia, Tickets, Etihad Airways, Abu Dhabi, airberlin