Etihad eyes partnership deal to expand fleet

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Last month Etihad, which provides limited disclosure about its financial prospects, said that it was seeking a possible deal with an Indian carrier.

Meanwhile, Kingfisher Airlines has issued a statement which indicates that the Indian carrier was in talks with the Gulf carrier.

India’s Jet Airways is the front-runner for an investment by Etihad Airways according to a senior Indian government source who added that the Gulf carrier could pay up to $330 million for a 24 percent stake in the Indian company, Reuters reported on Wednesday.

The sheer number of passengers that come from India and its proximity to the Gulf region has been the pull factor encouraging Etihad to expand into the Asian country.

“Not many European airlines or American airlines fly to the secondary cities of India, Pakistan and Bangladesh,” Hogan told the Financial Times.

However, the airline is clear about one element, as it aims to grow its equity portfolio; it does not want to be a major shareholder in other airlines.

“What I don't want to get caught up in is getting involved in managing these airlines day to day,” says Hogan, “we’ve got enough on our plate.”

Etihad’s rapid growth has recently been questioned by its western counterparts, who claim that the airline is a threat as it has an unfair advantage due to profit from low fuel taxes, low airport levies and high government infrastructure spending.

Hogan said that Etihad is not supported by the Abu Dhabi state. “We don't get free fuel; there is no form of subsidization from the government to the airline,” he added.

Because it is not traded publically and gives only selective figures, Etihad’s financial performance is hard to measure. Last year, it published its first profit data, reporting a net income of $14m. The airline only disclosed revenue, which rose 19 per cent to $1.3bn from $1.1bn a year earlier.

So far, Etihad reported that it borrowed $6 billion in external finance and is using Islamic finance to fund its aircraft acquisitions.

With the aim to expand Etihad’s airline fleet further, questions are being raised as to whether there are sufficient resources to support the move in such a competitive Gulf region.

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