The Abu Dhabi-based airline has been frequently mentioned as a potential investor in Aer Lingus and now that it has purchased 3% of its shares its intentions look serious.
So far Etihad has confirmed it is talking to Aer Lingus about possible code-sharing arrangements and the two airlines are also exploring joint procurement opportunities and says it won’t be increasing its shareholding beyond 3% pending the outcome of these discussions.
If it were to acquire the Irish government’s 25% stake – valued at around €130 million – this, together with its 3%, would be put Etihad on a par with Ryanair, which has just over 29% of Aer Lingus. This would give it the power to put some representatives onto the Aer Lingus board and have a big say in what happens there in the future.
There are advantages and new opportunities for both Etihad and Aer Lingus by becoming more intrinsically linked. It would enhance Etihad’s European network and allow it to compete head-on with the likes of British Airways and Air France. This deal would also potentially give Etihad access to the valuable slots Aer Lingus holds at Heathrow.
For Aer Lingus the link-up would see more traffic moving onto the Middle East, Africa and the Far East and help to grow its passenger numbers.
The latest share purchase is being likened to Etihad’s arrival at Air Berlin, where it initially purchased 3% of that airline before swelling its interest to 29%.
Aer Lingus will be anxious not to close the door to other potential suitors as the government strives to extract the best price for its shares so it is not a done deal yet.
Etihad took a controlling stake in airberlin in December, increasing its stake from 3% to 29% and in Air Seychelles, the national carrier of the island nation of the Seychelles.
Today's share purchase will also once again put the spotlight on Ryanair and what it might ultimately decide to do with its stake. It will be an interesting few months.