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Nimish Member
Joined: 16 Dec 2006 Posts: 9757 Location: Bangalore, India
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Posted: Fri May 23, 2014 6:08 am Post subject: Etihad receives secret funding from the Royal Family |
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From: http://www.reuters.com/article/2014/05/22/us-australia-etihad-funding-idUSBREA4L0A520140522
Quote: | Documents show royal funding for Etihad: media
(Reuters) - Abu Dhabi-based Etihad Airways had access to an interest-free $3 billion loan from the Abu Dhabi ruling family, the Australian Financial Review said on Thursday, stoking criticism from rivals that have long complained of state support for the carrier.
Citing what it said were leaked documents prepared for prospective financiers in 2011, the newspaper said the loan for government-owned Etihad required no repayments until 2027.
The airline, which also has equity stakes in Air Berlin and Aer Lingus, has long rejected allegations from rivals in Europe and Asia that it receives unfair financial support or state subsidies.
In a slide headed "Equity and Shareholders Loan," the document states: "The shareholder has provided significant loan facility for aircraft deposits and working capital - subordinated, interest free and no repayments until 2027."
(To view documents, click)
Etihad, which has been looking at a possible investment in loss-making Alitalia, said in a statement it had received financial support from its shareholder in the form of equity capital and shareholder loans, but gets no government subsidy.
It said the airline operated under a strict commercial mandate. It did not specifically comment on the $3 billion loan mentioned in the report.
Etihad is already a major shareholder in Virgin Australia Holdings, which has been engaged in a brutal price and capacity war with flag carrier Qantas Airways Ltd.
Qantas has long complained that Etihad and by extension Virgin, have benefited from subsidies from the Gulf state, something Etihad management has repeatedly denied.
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Hmm - long suspected as vanity projects by the Royal Family - and now confirmed. Definitely a good reason for Western carriers to clamp down on EY once it's confirmed that EY is indeed recipient of state subsidies. Or ask for similar subsidies for their own carriers (like QF or LH) !
What do folks here think?
* Are these "allegations" valid?
* Will this result in "Sanctions" against EY and more scrutiny for QR/ EK? _________________ We miss you Nalini! |
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Spiderguy252 Member
Joined: 10 Aug 2007 Posts: 4259 Location: Indian Ocean
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Posted: Fri May 23, 2014 10:50 am Post subject: Re: Etihad receives secret funding from the Royal Family |
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Nimish wrote: | * Will this result in "Sanctions" against EY and more scrutiny for QR/ EK? |
Not a chance in hell.
The only country that has shown some semblance of guts on this issue has been Canada, with EK.
Besides, this may be a means to an end in itself; Emirates generates upto 19% of Dubai's annual GDP, so if the sheikhs of the time feel that a funding boost is in order to preserve this rather crucial base, so be it. Perhaps it's the fault of the rest of the world for not requesting or attaining the same from their respective honchos up top.
I don't reckon these airlines claimed to be out and out private carriers either. _________________ Yeah. |
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Nimish Member
Joined: 16 Dec 2006 Posts: 9757 Location: Bangalore, India
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Posted: Fri May 23, 2014 12:21 pm Post subject: Re: Etihad receives secret funding from the Royal Family |
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Spiderguy252 wrote: | I don't reckon these airlines claimed to be out and out private carriers either. |
I don't think it's whether they're private or public carriers, the question is are they getting state subsidies - which makes them unfair competition. And the answer to that so far has been an explicit - "No, we don't get state subsidies" - which has now been disclosed as BS.
In this context if Germany or the UK choose to impose retaliatory measures against the MEB3, it would be deemed par for the course. Similar to what happens in the world of trade, if it turns out you're exporting at "below cost" due to state subsidies, the recipient country can impose additional duties to offset the unfair competitive edge. _________________ We miss you Nalini! |
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Spiderguy252 Member
Joined: 10 Aug 2007 Posts: 4259 Location: Indian Ocean
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Posted: Fri May 23, 2014 12:53 pm Post subject: Re: Etihad receives secret funding from the Royal Family |
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Nimish wrote: | Spiderguy252 wrote: | I don't reckon these airlines claimed to be out and out private carriers either. |
I don't think it's whether they're private or public carriers, the question is are they getting state subsidies - which makes them unfair competition. And the answer to that so far has been an explicit - "No, we don't get state subsidies" - which has now been disclosed as BS.
In this context if Germany or the UK choose to impose retaliatory measures against the MEB3, it would be deemed par for the course. Similar to what happens in the world of trade, if it turns out you're exporting at "below cost" due to state subsidies, the recipient country can impose additional duties to offset the unfair competitive edge. |
Fair enough then, but I doubt we will see any consequences for either Emirates, Etihad or Qatar - at least in the short term. _________________ Yeah. |
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stealthpilot Member
Joined: 19 Dec 2006 Posts: 2325 Location: BLR, DXB
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Posted: Mon May 26, 2014 2:49 pm Post subject: Re: Etihad receives secret funding from the Royal Family |
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Nimish wrote: | I don't think it's whether they're private or public carriers, the question is are they getting state subsidies - which makes them unfair competition. And the answer to that so far has been an explicit - "No, we don't get state subsidies" - which has now been disclosed as BS. |
That puts AI on top of the banned list. If Europe/Canada ban ME carriers the ME haters will be thrilled- if AI gets banned they'll have a heart attack
Not sure what to believe- going by the thread on airliners.net (we all know how accurate that is) EK had similar assistance when it started out in the 1990s but not since. What's true? What information is public? Who knows
A bigger question- what's the difference between the state giving the loan or a bank? $3 billion is a hell of a lot but when British airlines merged to become the BA of today what concessions did they get? Did LH get assistance when they started (in terms of regulations, slots, something?) Genuine questions. AI gets an incredible amount of government assistance in terms of loans/regulations/government travel/route allocation etc.
I'm not defending EY but if fuel is cheap in their city so be it. All airlines get (or got) government assistance in some form of another (The Air Canada crybabies as well)
An interest free no strings attached loan is another matter altogether ...... _________________ eP007 |
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