Etihad Airways, the struggling national carrier of the UAE, may have lost its balance sheet but not its appetite for investing in failed carriers. After burning its hands with Air Berlin, Alitalia, Air Seychelles and cutting down their premium products and many routes. They have had success with Jet Airways, but 9W has moved on making friends with KLM/Air France.
Etihad Airways now seems to be interested in buying another airline which has some toxic debt around it. That would be Air India!
Etihad is reportedly planning to bid for the debt-laden Air India group, which is up for sale, and has sent feelers to Reliance Anil Dhirubhai Ambani Group (R-ADAG), an erstwhile part of the most significant industrial conglomerate in India.
As per the Business-Standard,
Etihad is scouting for partners to form a consortium to bid for Air India and is in discussion with companies, including the Anil Ambani group
It is essential at this point of time to note what is at stake, and why this should not even be an option for Etihad Airways at the moment. They helped themselves into a $1.86 billion last year, and have climbed down from their 5-star service to become more mediocre off late as I hear.
On offer is a 76% percent stake in Air India, which comes with tonnes of bilateral rights and a young fleet of planes, but it is not like Etihad Airways will get it cheap. The successful bidder will have to take on $5 billion worth of debt, will have to live with a 24% stake held by the Government of India, and have to commit to holding on to the staff and can’t even change the brand name. So, it is not like it could become another Etihad Airways’ Regional.
Another potential bidder could be the Tata group, which could put down a bid along with a foreign partner. The Tatas already run two airline joint-ventures in India, one with Singapore Airlines as Vistara, and another with Air Asia as Air Asia India.