Secret Report Proves “Extensive, Ongoing” Scheme at Etihad
Joe Cortez August 26, 2015
Shredded paper with the text Evidence.
A report uncovered by investigators working for U.S. legacy carriers suggest government funding of Etihad Airways.
New documents obtained by the Partnership for Open and Fair Skies suggest Etihad Airways received illegal funds from the government of Abu Dhabi — funds Etihad has called “completely normal.”
In a press release, the Partnership detailed the contents of an Etihad financial report from 2014, which the organization says was submitted as part of a larger legal filing in the Open Skies investigation. According to the Partnership, the confidential report was discovered in Hong Kong and completed by auditing firm KPMG. Within the 62-page report, auditors note their concerns with an operating loss of over $3 billion as of the end of 2014, while also highlighting the availability of “authorized share capital” by the Emirate of Abu Dhabi. The Partnership claims this report proves Etihad is part of an “extensive, ongoing subsidization scheme” and violating Open Skies agreements.
“Etihad’s own financials prove that it is not a commercially viable enterprise and owes its continued existence to massive government subsidies from the United Arab Emirates,” said Jill Zuckman, chief spokesperson for the Partnership. “Do we really need further evidence that American aviation workers are being forced to compete against foreign treasuries in violation of Open Skies policy?”
In a rebuttal to UAE newspaper The National, Etihad claims that the support the airline receives is legal and well within the terms of the country’s Open Skies agreement with the U.S.
“We have never made any secret of the fact that we have received equity capital and loans from our shareholder,” said an airline representative. “That is completely normal for any business which has significant long-term capital commitments, for example for aircraft deposits.”
In May, Etihad announced a record net profit of $73 million in 2014, up 52.1 percent year over year. While the Partnership alleged the impressive profit was the result of illegal subsidies, Etihad CEO James Hogan credited continued growth “in size, reputation and performance, but also in maturity” for the airline’s best year to date.
[Photo: iStock]
There was no bailout, the airlines were compensated for the days the government forced them NOT to fly. How does the stock market subsides an airline?
I would rather take my chances, and fly on what might be a well-funded, government-subsidized airplane, which HOPEFULLY would extend to Parts and Maintenance, THAN, risk my life and fly on an airplane owned by a company that could not make ends meet, and MIGHT THEN sacrifice, even in ANY small way, Parts & Maintenance, WHICH MIGHT ALSO VERY WELL INCLUDE DISGRUNTLED WORKERS..... Not to mention... we already DO subsidize our US Airlines through bailouts, bankruptcy laws, stock market, etc... So .... who are we kidding?....Other than being hypocrites, of course....
The profit is pathetic vs the capital employed. Well I hope the big 3 will never need to take out loans or raise equity as apparently that represents unacceptable business practices in the airline industry.
Once again: why is it okay for US legacies to receive government funds via bailouts, and to wipe out debt via bankruptcy court, but it is not okay for other carriers that operate in a different political and business environment to receive subsidies from their governments? American legacies' hypocrisy is so blatant, it makes me roll my eyes every time I read about this Open Skies brouhaha. They are afraid of the Gulf Carriers because they cannot match them at any level.
This article appears to be composed almost entirely by the big 3 legacies cartel, aka "The Partnership". What's the contribution of Mr Cortez, besides the picture?