Abu Dhabi's Etihad buys into Air Seychelles

Etihad Airways will acquire a 40 per cent stake in Air Seychelles, its second airline acquisition in the last five weeks as the rapidly growing Abu Dhabi-based carrier embarks on an ambitious expansion plan.

Etihad and the Seychelles government will each invest $20 million in the state-owned airline, Etihad said on Wednesday. The Abu Dhabi airline will also provide a $25m loan to help Air Seychelles meet working capital requirements and support network development.

"The investment in the national carrier of Seychelles is a natural next step towards growing our operations in the increasingly important leisure markets of the Indian Ocean and Africa," Etihad's Chief Executive Officer James Hogan said in the statement.

The agreement also includes a five-year management contract for Etihad Airways to encourage Air Seychelles' long-term growth, the statement said.

Last month, state-owned Etihad acquired a stake of around 30 per cent in Germany's Air Berlin.

Middle East carriers such as Etihad, Qatar Airways and Dubai-based Emirates have been aggressively expanding route networks, provoking fears that Gulf-based superjumbos would draw traffic from European carriers' hubs.

Qatar Airways recently acquired a 35 per cent stake in all-freight carrier Cargolux, while the Air Berlin stake buy was the first time a Gulf carrier has bought an equity stake in a European passenger airline.

Etihad owns a fleet of 64 Airbus and Boeing aircraft with another 100 aircraft on order.