Etihad close to Aer Lingus exit after British Airways parents gets nod

Etihad has moved a step closer to exiting its stake in Aer Lingus after the Irish government consented to the sale of the flag carrier to IAG.

IAG had proposed an offer of €1.36 billion (Dh5.43bn) for Aer Lingus in January, but the deal is pending the approval of Ryanair, the Irish low-cost airline, which is the largest shareholder in Aer Lingus.

Between 2012 and last year, Etihad accumulated over 4 per cent of the Dublin-based carrier. The sale of its stake following an IAG takeover would net the carrier about €40 million which could be channelled towards other European airlines in which it has stakes, such as the struggling airberlin and Alitalia.

“The strategic alignment with Aer Lingus was never fully realised. The network benefit, not a quick return on investment, is what drives Etihad’s strategy,” said Will Horton, a senior analyst at the Centre for Aviation (Capa).

Still, the proceeds from any sale could help the Abu Dhabi carrier grow its European network.

“The €40m will provide Etihad with additional resources, they probably want Alitalia and airberlin to get back [to profit]as quickly as possible, and this makes it likely that they will direct the money there,” Mr Horton said.

But an exit by Etihad as an Aer Lingus shareholder would not mean an end to the relationship between the two airlines, as the oneworld alliance, led by IAG’s British Airways, still allows its members to have a relationship with other carriers outside of oneworld.

James Hogan, Etihad’s chief executive, said in March that his company bought its stake in Aer Lingus based on a strategy of increasing the number of flights between Dublin and Abu Dhabi.

The original plan was for a “large investment”, but once it became clear that the management of the Irish carrier did not share Etihad’s vision, the airline moved on to focus on deals with airberlin and Alitalia.

Etihad’s growth strategy is focused on expanding its global route network by codeshare partnerships and forming equity alliances, in which it invests in carriers in strategically important regions.

Its equity alliance partners include airberlin, Alitalia, Virgin Australia, India’s Jet and Air Seychelles.

Originally Published on The National: