Dubai/Milan: Legal ties between Etihad Airways and its sole shareholder, the Abu Dhabi government, are “limited,” one of the worlds top credit rating agencies has said amid heated allegations that Etihad and other Gulf carriers are subsidised by their government owners.
On Wednesday, Fitch Ratings assigned Etihad a “Long-term Issuer Default Rating (IDR) of ‘A’ with a Stable Outlook,” according to an emailed statement.
The rating incorporates Etihad’s strategic links with Abu Dhabi, which holds an AA/Stable rating. Fitch said the strategic and operational ties “and to a lesser extent, the legal ties” are strong.
“We assess the legal ties between Etihad and Abu Dhabi to be limited as Etihad does not benefit from cross-default provisions and/or guarantees. The inclusion of any of these provisions would strengthen the linkage and would likely to be positive for the rating,” Fitch stated.
Major American and European carriers are calling on their governments to restrict the growth of the Gulf’s biggest airlines, Etihad, Emirates and Qatar Airways, because they say they are unfairly subsidised. The American and European carriers argue that the alleged subsidies allow the Gulf carriers to take passengers by offering uneconomical prices. The three Gulf airlines deny they are subsidised.
“The Fitch A rating is further independent recognition of the strength of this business and of our strategy,” James Hogan, President and Chief Executive Officer of Etihad, said.
Last month, Etihad reported a net profit of $73 million (Dh268 million) for 2014.
