Air Seychelles in talks with Etihad Airways to end alliance

Air Seychelles and Etihad Airways are in talks to dissolve their partnership, a final remnant of the Abu Dhabi carrier’s equity alliance strategy that led to billions in losses.

The Seychelles government is set to become the sole owner of the airline, Air Seychelles chief executive officer Remco Althuis said Wednesday at an online event hosted by industry group CAPA. The talks “are being formalised as we speak,” he said.

Etihad Airways declined to comment.

A divestment of Air Seychelles would wrap up the so-called equity alliance strategy, after Etihad reduced its stake in Air Serbia to 18 per cent from 49 per cent in December. The Gulf carrier has been unwinding a global expansion plan through which it bought a 40 per cent stake in Air Seychelles in 2012.

The network of airline investments led to $7bn in losses over the five years ending in 2020.

Some of Etihad’s other airline investments folded or went through insolvency bouts, including Jet Airways, Virgin Australia, Air Berlin and Alitalia.

Air Seychelles has been implementing a transformation plan since 2018 after racking up “substantial” losses mainly from flying long-haul routes, Althuis said. The airline has since abandoned intercontinental markets such as Paris, replaced Airbus SE A330 planes with smaller A320 jets and focused on its regional network.

Air Seychelles was in “very good shape” before the pandemic hit and was ahead its 2022 plan by 12-16 months, Althuis said.