Etihadhas been struggling financiallyfor quite a while, and is undergoing a restructuring, as we see them try to increase revenue and cut costs.
Continue reading: Report: Etihad Seeking $600 Million Loan
Share your questions, experiences, and thoughts below.
Can't ask the sheikh for more money?
UAE's combined sovereign wealth fund is over 1.3 trillion and only 2nd to China.
600 million is just 0.04%
Interesting to see if UAE investments are also in financial decline.
Etihad took out loans before. This is actually a non-message. With interest rates where they are they would be stupid to not load up on almost free money.
The ultimate plot twist in this saga will be if Delta steps in to save them. Kills three birds with one stone: grants a more useful connecting partner in the Middle East than Saudia or MEA, a backdoor to controlling Alitalia, and a potentially lucrative JV partner.
It will never happen, but man would it be ironic.
Hahaha @Debit - right on the money! No doubt EY will make sure they have white CEOs to curry favor with the rest of the world, unlike QR.
Wait a second..Isn't EY owned by the Abu Dhabi government? Why not seek a loan from them lmao.
Someone needs to slap the Etihad CEO across the face, make him sell the stakes in 2nd rate airlines and have them join Star Alliance!
Done!
Airline saved!
If you were lucky enough to hit one of the U.S's crazy lotto draws, Say you won and hit $700M after taxes. Then Eithad wanted to borrow $600M from you with a substantially higher interest rate than what a bank could give you for a term deposit as well as potential a other perks that could be dicussed.
Would you loan them the money??? and what else would you ask them for in return???
......and here in India Jet Airways is hoping Etihad funds them for it to survive. What an irony!
Etihad's stake in Jet Airways and JetPrivilege has a combined worth of just over $600 million, which I believe they've been trying to sell off recently. Shouldn't that cover them instead of taking out a loan?
@Kyall no I wouldn't, because Etihad is a sinking ship and I will likely lose my investment.
@Eskimo don't count on it. Other emirates like Dubai, Sharjah, Al-Ain, and RaK (to name a few) shouldn't have to foot the shortcomings of Abu Dhabi's project. Don't forget this is all because of one James Hogan and his extreme recklessness.
My guess: mid-term Etihad gets integrated into „United Emirates Airlines“ with two hubs like FRA and MUC for LH. And Emirates can get the earlier slots for the canceled Etihad A350s. Alone Etihad will not survive given the relative strength of QR and EK.
it's cheaper to loan regarding how cheap the money is on the markets than using they own assets. Basics. Nothing new, they did in the past and they are right to do it this way.
@schar yes... but. The rulers of UAE are in Abu dhabi and things are more complicated that what you describe.
The real money and big money is in abu dhabi, and abu dhabi will not give up having a flagship.
I really believe that this will never happens in a near future.
@Jeff No.
I would be shocked if the Emir of Abu Dhabi does not provide a backstop to EY's financing needs
were those needs to ever become dire.
He bailed out the Emirate of Dubai. He will bail out his own airline.
@Kyall
I hope you don't buy lotto regularly.
1. To get 700M after Uncle Sam takes his cut means you need to win over a Billion pre tax.
2. Here is the real kicker, to get that much in lump-sum after tax you probably have to win close to 2 billion.
So if you were to win 2 billion in lotto, are you really going to lend money to Etihad and live your normal life while trying to squeeze some freebies from the airline?
You know if EY defaults you would set 2 world records. Not only would you win the largest in history, you also end up as the worst lotto winner in history ever. At least others who won and used up all their winnings did get to enjoy the money while it last.
Ray - That's exactly how a country works, the bits that are doing well help out the bits that aren't... Plus of course, Abu Dhabi has bailed out Dubai in the not too distant past.
Traveler - Having hubs in Abu Dhabi and Dubai makes no sense. They might as well just stay as 2 different airlines if they're going to do that.
@callum - don‘t underestimate the amount of back-office and operational savings plus schedule alignments that could be generated by such a combination. It also helps that both key cities (Dubai and Abu Dhabi) continue to have a significant amount of direct flights. For someone in Europe flying to Australia, it won‘t matter if they fly LHR-AUH-SYD or LHR-DXB-SYD if they have to change planes anyway. A combined „United Emirates“ might offer flights every 2 hours from LHR.
@eskimo, Thanks for your effort in hiur response, Im unfamiliar with U.S lotto and tax as I'm on a different continent,
Clearly I was making a joke alsi
@ Eskimo
Reminds me of the joke in an ancient comedy series where one of three friends won $100,000 in a lottery. The 2 others come back a week later and find the winner broke.
“How did you spend $100,000 in a week?!”
He replied: “well, half of it went on booze and prostitutes. But the other half I just wasted”.
I’m not sure into which category you’d put “investing in Etihad”.