Etihad to increase Air Berlin holding to 29.21%

Etihad Airways (EY) will increase its shareholding in Air Berlin Plc (AB) to 29.21% for €72.9 million ($95 million) as part of an agreement that includes far-reaching commercial cooperation and debt financing.

EY built up a 2.99% holding in the Berlin-based carrier between January and August and will become AB’s largest single shareholder upon completion of the deal. As of Sept. 30, the company’s largest shareholder was Turkey’s ESAS Holding, owner of Pegasus Airlines.

The Abu Dhabi-based airline will augment its shareholding through a new share issue by AB. It will subscribe to 31.6 million new shares issued under exclusion of the pre-emptive rights of AB’s existing shareholders on the basis of a set share price of €2.31, AB said in a statement. EY will also provide financing of up to $255 million to support fleet development and future network growth through Dec. 31, 2016. 

The commercial cooperation includes integrating the carrier’s frequent flyer programs an extensive codeshare agreement, with EY initially adding its code on 36 of the German carrier’s 171 destinations and AB adding its code on 24 of EY’s destinations.

AB stressed it “further continues to plan joining oneworld alliance by spring 2012.”

AB CEO Hartmut Mehdorn said the deal opens up “enormous opportunities for the future of our company. This applies especially to future market development and the realization of synergies.”

AB will move its operation from Dubai airport to Abu Dhabi to connect to EY’s network to Asia and Australia. It will operate four weekly flights using an Airbus A330-200 between Berlin and Abu Dhabi from Jan. 15.

The companies will seek anti-trust immunity to allow greater coordination of route networks and of sales and marketing activities. They will also set up a joint procurement task force to look for cost efficiencies across the two companies, including areas such as fleet procurement and deployment, maintenance, repair and overhaul and general procurement.

The transaction closing is planned for the first quarter of 2012.