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[INGLÊS] Os empréstimos secretos da Etihad

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Etihad's secret Abu Dhabi royal family loan revealed

May 22, 2014 - 11:46AM

Joe Aston

Etihad Airways received massive financial support from the royal family of Abu Dhabi contrary to long-standing denials, documents obtained by Fairfax Media show.

The state-owned airline had access to a secret, interest-free $US3 billion ($3.3 billion) loan from the Abu Dhabi ruling family that required no repayments until 2027, according to documents prepared for prospective financiers.

Etihad chief executive James Hogan has repeatedly denied that the airline is subsidised.

"We are a government-owned ­carrier but we have been established and have to run as a commercial business. We get no state-funded handouts," he said at Washington's International Aviation Club in 2009.

Etihad's denials that it is financially propped up by its owners have been questioned by rivals like Qantas Airways, which has accused the airline of predatory behaviour funded by large subsidies from the Gulf state.

Qantas is seeking the removal of foreign investment restrictions to free it to raise capital and compete with Etihad and other state-owned airlines.

A review prepared by management consultants Booz & Co in 2010, which was presented to Crown Prince Mohammed bin Zayed Al Nahyan, shows Etihad used special deductions to post its first profit, of $US14 million, in February 2012.

The review was shared among the Prince's executive council of advisers.

Another document, from 2011, was presented to potential lenders during private meetings in New York, London and Sydney and has since circulated among the management ranks of Etihad's competitors, such as Qantas and Emirates. Industry sources provided the documents to the Financial Review.


A PowerPoint slide entitled "Equity and Shareholder's Loan" says: "The shareholder has provided significant loan facility for aircraft deposits and working capital – Subordinated, interest free and no repayments until 2027".

Another slide presented to Abu Dhabi's ruler deals with the airline's "Public Service Obligations", which include unprofitable routes, training and employing Emirati citizens and marketing sponsorships.

A footnote to the public service obligations [PSO] slide says that "Executive Council covers Man City" – an apparent reference to the Abu Dhabi government. Etihad is the major sponsor of English Premier League team Manchester City, owned by the Crown Prince's brother Sheikh Mansour bin Zayed Al Nahyan, and paid a record £400 million ($731.8 million) deal for naming rights to the team shirt and stadium.

Etihad did not respond to a request for comment on Wednesday.

Asked about sponsorships last month, Mr Hogan said "everything is included. We pay for the sponsorships".

"The results are the results."

Mr Hogan has adamantly denied suggestions the airline does not have to cover the cost of unprofitable routes or the salaries of all its domestic workforce. More than 20 per cent of Etihad's workforce is now made up of citizens from the United Arab Emirates, which is known as "Emiratisation".

The report factored in an Emiratisation subsidy to reach a profit in 2011.

Mr Hogan has insisted that "everything we do with our headcount is on our payroll". In 2012 he said that "we don't have PSO routes, we have a commercial mandate. We do not fly any route that does not make a return or a network contribution".

A PowerPoint slide entitled "Profitability 2011" bases Etihad's projection of a $10 million profit on a "network PSO and Emiratisation offset". The result also relied on excluding "assets and loan write-offs".


The 2011 break-even plan is reliant on an average 2011 price of brent oil of $US78 per barrel, with a $US10 per barrel price movement impacting the airline by $US40 million. Given the average price ended up being $US111 per barrel, the price sensitivity would represent an approximate hit of $US130 million against Etihad's original estimated profit figure. Yet Etihad announced a $US14 million full-year profit for 2011, rising to $US42 million in 2012 and $US62 million in 2013. The figures were audited by KPMG.

Etihad's accounts show the airline posted losses of $US2.1 billion in the three years from 2007, and projected a $US595 million loss in 2010. Mr Hogan, an Australian citizen, took over in 2006.

Another slide, entitled "What Etihad needs to win?" is a shopping list of subsidies being sought from its shareholder. They include "PSO destinations loss to be underwritten", the granting of land for more Etihad buildings and "approval of acquisition of targets" in passenger air transport – which turned out to be equity stakes in Virgin Australia, Air Berlin and Jet Airways.

The revelations about Etihad come weeks after Qantas announced it would slash 5000 jobs, severely reduce its costs and possibly float assets, blaming "an uneven playing field" and "market distortions", and will increase pressure on the federal government to act.

This week Etihad increased its stake in Qantas's main competitor Virgin Australia to 21.24 per cent. Mr Hogan will join Virgin's Board in July. Mr Hogan is scheduled to present to potential financiers in Sydney on Thursday.

Mr Hogan and Qantas chief executive Alan Joyce have become bitter rivals and Qantas has responded to Etihad's injection of capital into Virgin by turning to Canberra for subsidies of its own. Other state-owned carriers flying into Australia include Qatar, Singapore, Malaysian, South African, Emirates and Garuda. Air New Zealand is 53 per cent owned by its government. Many airlines have been bailed out of bankruptcy in recent years in the United States, Japan and the European Union.

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  • 3 months later...
Etihad Airways to raise $2 bln in 2014 to fund stake buys, aircraft

(Reuters) - Abu Dhabi's Etihad Airways is on track to raise about $2 billion in loans this year to fund its equity investments around the world and aircraft purchases, its chief financial officer said on Thursday.

Etihad has aggressively pursued a global expansion strategy by picking up equity stakes in eight airlines around the world, including Air Berlin, Aer Lingus, Virgin Australia and, most recently, Alitalia.

The Gulf carrier entered a deal last month to buy almost half of Alitalia and invest 560 million euros ($751 million) into the loss-making Italian airline.

"Last year we raised approximately $2 billion, this year we are on track to raise approximately $2 billion," James Rigney told reporters on the sidelines of an aviation conference in Abu Dhabi.

"The primary focus of that money is aircraft-related, and also for investments made in equity," he added.

The funds would be raised through loans, Rigney said, declining to name the lenders.

Etihad said in March it would take delivery of 18 aircraft this year: 10 from Airbus and eight from Boeing.

The airline held roadshows in New York and London earlier this year as part of its fundraising strategy. In the past, Etihad has typically utilised institutional credit from local and international banks, export credit agencies as well as lease and lease financing.

Rigney also said the airline's revenue has grown at 25 percent annually over the last 10 years. (Reporting by Stanley Carvalho; Writing by Praveen Menon; Editing by Andrew Torchia and David French)

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