Etihad Airways - Biggest Single Stakeholder in Air Berlin

Etihad Airways of Abu Dhabi and German airline, Air Berlin has announced a strategic deal making Etihad Air Berlin’s biggest stakeholder with access to new European networks as it seeks to maintain pace with its major opponent, Emirates.

The fast-growing Gulf airline, Etihad Airways has accomplished its goal of expanding in Europe by becoming the biggest stakeholder in Air Berlin, a key German carrier. Etihad Airways, which earlier only had less than 3 percent stake in Air Berlin has now boosted it to 29 percent.

As per the deal announced on Monday, Etihad Airways will give approx $255 million (£162 million) of funds for the fleet development and network expansion at Air Berlin and in return will take two seats on the board of Directors of Air Berlin.

Moreover, the deal also includes a code share agreement that will grant Etihad access to Air Berlin’s European short-distance network, and to the German capital of Berlin.

“The strategic partnership with Etihad Airways opens up enormous opportunities for the future of our company.” Air Berlin CEO, Hartmut Mehdorn said.

Etihad Airways’ Chief Executive Officer James Hogan welcomed this deal and said, “This new partnership expands our network reach, gives us access to 33 million new passengers, and provides us with a real opportunity for global growth. Through Air Berlin, we gain immediate access to a broad and complementary European market, with outstanding connectivity options for customers of both airlines.”

Moreover, the German carrier has also decided to move its Middle East operation from Dubai to Abu Dhabi and will offer flights to Abu Dhabi from Berlin four times a week. This deal will possibly be very rewarding for the budget-oriented European travellers seeking cheap flight tickets to travel to Abu Dhabi.

Further, as per the agreement, Air Berlin will initially serve four A330-200 flights between Berlin and Abu Dhabi per week from January 15, 2012, which will enable the European travellers to access 29 flights per week between Abu Dhabi and four German hubs. This frequency can go as high as 42 flights from mid April.

Every year millions of Europeans book tickets for flights to Abu Dhabi and land at the city’s airport to experience blissful holidays. The agreement between the second largest airline of Germany and the flag carriers of UAE has raised the chances of these travellers being able to net cheap flight tickets.

For maintaining the cost efficiencies across the two companies, both the airlines have planned to create a combined procurement panel to handle areas like fleet procurement and operation, maintenance, repair and overhaul (MRO) and other general procurements.

Hartmut Mehdorn was quoted in online reports as saying: “This partnership opens enormous opportunities. Abu Dhabi will become our new gateway to Asia and Australia.”

James Hogan showed his contentment with the agreement and referred it as the most important one in the history of Etihad Airways.

With the agreement, Etihad Airways has raised its stake in Air Berlin from 2.99 percent to 29.2 percent followed by ESAS, Pegasus Airlines’ parent company.

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