Etihad Airways Said to Plan Debt Sale as Partners Struggle

  • HSBC, National Bank of Abu Dhabi among lenders hired for deal
  • Airline’s sukuk issuance expected by the end of the year

Etihad Airways PJSC has hired banks for a potential Islamic bond sale, according to people familiar with the matter.

The third-biggest airline in the six-nation Gulf Cooperation Council mandated banks including HSBC Holdings Plc, National Bank of Abu Dhabi PJSC and Dubai Islamic Bank PJSC for the offering, said the people, who asked not to be identified because the information isn’t public. The Abu Dhabi-based carrier’s sukuk is expected by the end of the year, they said.

The sale plan comes as Etihad’s equity partners in Europe grapple with overcapacity, shrinking travel demand and mounting competition. Air Berlin Plc, in which the Abu Dhabi carrier has a 29 percent stake, last month announced the closing of its Hamburg base and five others in Germany as it halves it fleet and cuts 1,200 jobs. It’s been bailed out by the state-owned Gulf airline as it racked up 1 billion euros ($1.1 billion) of net losses in the past three years. Alitalia, 49 percent-owned by Etihad, may need to cut jobs to improve productivity as part of a restructuring program.

A spokesman for Etihad said the airline doesn’t comment on rumors or speculation and a spokesman for NBAD said the bank won’t comment on client deals. HSBC declined to comment and DIB didn’t respond to a request for comment.

Bond Sales

Bond sales across the GCC have surged to more than $47 billion this year, already the busiest on record, according to data compiled by Bloomberg. Cash-strapped nations and state-controlled entities are turning to international debt markets after the price of crude, which props up most government spending, plunged by more than 40 percent in the past two years.

Etihad last-year raised $700 million via a five-year bond with partners including Air Berlin and Alitalia SpA. The group sold a further $500 million bond in May.

Etihad is rated A by Fitch Ratings, the sixth-highest investment grade.

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