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Etihad Purchases 40% Air Seychelles Stake Via $45 Million Accord

Jan. 25 (Bloomberg) -- Etihad Airways, the Middle East’s third-biggest carrier, agreed to buy a 40 percent stake in Air Seychelles Ltd. to tap the high-end tourism market and the island state’s emerging business links with China.

Abu Dhabi-based Etihad will invest $20 million in the Indian Ocean carrier, matched by the Seychelles government, the current owner, and provide a $25 million loan to meet working capital requirements and fund new services, it said today.

The deal, which follows Etihad’s increased investment in Air Berlin Plc last month, includes a five-year management contract aimed at boosting growth and cutting costs after Air Seychelles this month fired 116 workers, or almost 20 percent of the workforce, and scrapped all of its long-haul services.

Etihad Chief Executive Officer James Hogan said in a statement that his airline will help the Seychelles tap European tourism markets after the islands posted record visitor numbers last year. Joel Morgan, the archipelago’s home affairs minister, said the deal provides a “game-changing strategic partnership.”

Etihad will also increase flights between Abu Dhabi and the island of Mahé from four per week to daily.

In operation since 1978, Air Seychelles operates a Boeing Co. 767-300 jetliner, together with three DHC-6 Twin Otter turboprops and a Short 360, according to its website.

The carrier, which also received $15 million in government subsidies last year, has maintained services to Mauritius and South Africa, together with flights between some of the state’s 115 islands, it said in a statement Jan. 9.

To contact the reporter on this story: Tamara Walid in Dubai at twalid@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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