Etihad's Secret Loans Revealed

[Brad Myer]

http://www.smh.com.au/business/aviat...522-38pja.html

Etihad Airways received massive financial support from the royal family of Abu Dhabi contrary to long-standing denials, documents obtained by Fairfax Media show.

The state-owned airline had access to a secret, interest-free $US3 billion ($3.3 billion) loan from the Abu Dhabi ruling family that required no repayments until 2027, according to documents prepared for prospective financiers.

Etihad chief executive James Hogan has repeatedly denied that the airline is subsidised.

"We are a government-owned *carrier but we have been established and have to run as a commercial business. We get no state-funded handouts," he said at Washington's International Aviation Club in 2009.

Etihad's denials that it is financially propped up by its owners have been questioned by rivals like Qantas Airways, which has accused the airline of predatory behaviour funded by large subsidies from the Gulf state.

Qantas is seeking the removal of foreign investment restrictions to free it to raise capital and compete with Etihad and other state-owned airlines.
A review prepared by management consultants Booz & Co in 2010, which was presented to Crown Prince Mohammed bin Zayed Al Nahyan, shows Etihad used special deductions to post its first profit, of $US14 million, in February 2012.

The review was shared among the Prince's executive council of advisers.

Another document, from 2011, was presented to potential lenders during private meetings in New York, London and Sydney and has since circulated among the management ranks of Etihad's competitors, such as Qantas and Emirates. Industry sources provided the documents to the Financial Review.