Etihad Airways has relinquished its 40% stake in Air Seychelles, handing over full ownership of the airline to the Seychelles government.
In 2012, Etihad Airways had taken a stake in the Indian Ocean airline in as part of a wider equity investment strategy. In wake of the COVID-19 pandemic, the Middle East-based airline has been looking to divest its foreign airline investments.
Now, after months of discussions, the Seychelles government will pay just US$1 to recover the 40 percent share and has also negotiated a favourable debt repayment plan with Etihad. As a result of the contract, Air Seychelles will now be fully state-owned and plans to restructure its board in June.
Chief executive Remco Althuis, chief financial officer Michael Berlouis, and other incumbent executives at Air Seychelles, will remain in position until then. Nane Nanty will lead the new board as chairperson, with Alan Mason as co-chairman.
Air Seychelles owed Etihad Airways debts over $72 million, which both parties have been negotiating to restructure. Together with relinquishing its stake, Etihad has agreed to reduce the debt it is owed by Air Seychelles by 79 percent. Air Seychelles will now have to pay $11 million rather than the full $72 million.
The Secretary of State in the Ministry of Finance, Patrick Payet, said, “We are going to pay only 21 percent and this liability has been taken over by the government. Repayment will start from 2022 onwards. The second negotiation that we have is with the bondholders, where we are proposing to them to pay only $20 million.”
Etihad Airways had acquired its stake in Air Seychelles as part of its wider plan to go global. However, years of losses saw architect of the plan, chief executive James Hogan, leave and the gradual dissolution of the strategy.
Over the five years ending in 2020, the network of airline investments led to $7 billion in losses.
A few of Etihad’s other airline investments have failed, with airBerlin folding in 2017, followed by Jet Airways, which collapsed in 2019, and Virgin Australia, which entered administration last year. Etihad has reduced its stake in Air Serbia to 18 per cent from 49 per cent last December, while Alitalia, however, struggles on in Italy.