(MENAFN - Khaleej Times) Etihad Airways has acquired a 2.9 per cent stake in Irish airline Aer Lingus to boost its European profile.
The Abu Dhabi airline said "the purchase reflected its desire to forge a commercial partnership with the Irish national carrier", which could produce significant commercial benefits for both airlines.
This follows months of speculation with Etihad making no secret of its interest in Aer Lingus.
Etihad Airways CEO James Hogan told the Irish media in February that the group was interested in talks with the Irish government over its 25 per cent stake in Aer Lingus.
"Aer Lingus and Etihad are engaged in discussions which to date have focused on reciprocal code-share opportunities," Aer Lingus said in a statement to the Irish media. "Future discussions may explore additional commercial and cost opportunities to develop a closer working relationship in areas such as joint procurement."
"Etihad knows that growing in Europe is vital for its expansion and profit plans and all of its investments to date have been with carriers that need restructuring so Aer Lingus seems like a good fit - notwithstanding the sizeable slots it has at Heathrow too," Saj Ahmad, chief analyst at London-based StrategicAero Research, told Khaleej Times.
"It appears Etihad is prepared to buy a stake on the open market to bypass Aer Lingus and perhaps force them into discussions. Whether Aer Lingus tries to be defensive or engage in direct talks is unclear, but Etihad has drawn first blood in the predatory battle."
The Irish Times in a report revealed that Etihad has used Bank of America and Merrill Lynch to buy about 11 million Aer Lingus shares on its behalf over the past couple of months.
"This suggests that Etihad will be at the table when Aer Lingus is put up for sale," said Joe Gill, an analyst at Bloxham Stockbrokers in Dublin, adding that the state will probably dispose of its holding in the next six to 12 months.
The Irish government plans to offload its stake in Aer Lingus as part of its programme of state asset sales, which would be done when the timing is right.