Etihad's first joint financing with equity partners further tests archaic airline ownership rules

Etihad continues to implement new forms of cooperation with its equity partner airlines, pushing beyond the limits of other partnerships not involving a controlling stake. The Etihad equity alliance goes beyond codesharing and revenue-generating activities to also seek cost synergies, which partnerships and alliances have seldom managed to achieve.

Etihad is now moving from specific operational synergies (crew resources, aircraft) to macro financing across the group via a USD700 million joint bond financing transaction in the capital market. The allocation of the funds is nearly 20% each to Etihad, Etihad Airport Services, airberlin and Alitalia; 16% to Jet Airways; and the remainder to Air Serbia and Air Seychelles. This is the first time that Etihad and its equity partners have raised funds together and may be the first such joint financing anywhere in the airline industry.

Etihad's equity alliance consists of non-controlling stakes. Nevertheless, as the airline itself said in a release on 21-Sep-2015, the partners collaborate "through measures which otherwise would only be available through mergers or takeovers". Etihad Airways Partners is looking and feeling more and more like a consolidated group of companies under common ownership and control.