Etihad Says U.S., European ‘Protectionism’ Could Damage Business

Etihad Airways, facing U.S. and European claims that it benefited from unfair subsidies, said the accusations amount to protectionism that threatens its business.

Efforts by the three biggest U.S. carriers and European counterparts to restrict Etihad’s expansion are a major concern for the company and could stem the growth of its network, Chief Executive Officer James Hogan said Thursday in a statement.

“We are currently faced with unprecedented external challenges,” Hogan said as Etihad announced a 52 percent jump in annual earnings. “Of particular concern has been the rise in aggressive protectionist sentiment in Europe and the U.S., where both Etihad and its partner airlines are being targeted.”

American Airlines Group Inc., Delta Air Lines Inc. and United Continental Holdings Inc. said in a report to the Obama administration that Etihad has received $17 billion in subsidies since 2004, including interest-free loans, equity infusions and fee exemptions, prompting the government to begin an investigation. In Europe, Etihad has faced scrutiny over its minority investments in local carriers, while the Netherlands has said it will deny additional access over the aid claims.

“Despite these hurdles, Abu Dhabi-based Etihad will continue to grow as planned in 2015,” Hogan said, adding that its expansion proceeded “strictly to plan” last year.

Profit Surge

Net income at Etihad reached $73 million in 2014 as the passenger tally increased by 22 percent to 14.8 million, revenue rose almost 27 percent to $7.6 billion and the company’s stakes in other airlines drove transfer traffic.

Etihad is vying with Gulf rivals Qatar Airways and Emirates of Dubai in seeking to funnel inter-continental passengers via its hub, a strategy that’s at the heart of the attacks from Western competitors. Hogan has in turn said U.S. carriers have had $64.9 billion in bankruptcy and pension aid.

Etihad added 10 new destinations in eight countries last year, including Los Angeles, Dallas and San Francisco -- routes that prompted accusations from U.S. airlines that the Gulf carriers are rushing to add capacity before a possible suspension of a bilateral treaty in the spat about subsidies.

The company, No. 3 in the Gulf behind Emirates and Qatar Air, introduced its first Airbus Group NV A380 and first Boeing Co. 787-9 last year, and will take delivery of 16 planes this year, including four 787s and four A380s.

Etihad has joint plane-purchasing arrangements with its equity partners and will development that relationship further through a global funding platform with Alitalia SpA, Air Berlin Plc, Air Serbia, Air Seychelles Ltd. and Jet Airways India Ltd.

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