Etihad IPO likely to attract ‘significant’ investor interest

February 28, 2025, 1:30 PM

Passengers board an Etihad Airways airplane at Abu Dhabi; the airline plans to carry 33 million passengers by the end of the decade — Passengers board an Etihad Airways airplane at Abu Dhabi. The airline plans to carry 33 million people by the end of the decade

Etihad Airways could raise $1bn
IPO is expected in March
First Gulf airline sale for 20 years

Abu Dhabi-owned Etihad Airways is likely to attract “significant” investor interest if and when it sells shares in an initial public offering expected in March in the first Gulf Arab airline IPO in almost 20 years, analysts have said.

Owned by Abu Dhabi sovereign wealth fund ADQ, the airline may raise as much as $1 billion in a sale of 2.7 billion primary shares, equivalent to 20 percent of the UAE company, Reuters reported this week, citing people familiar with the plans.

“Driven by sound financial results and strategic expansion plans, Etihad can expect significant international interest,” says Vijay Valecha, chief investment officer at Century Financial.

In February Etihad announced net profits of $476 million, more than triple that of 2023, after carrying a third more passengers, or 18.5 million people.

Etihad paid a price for an aggressive expansion policy after its creation in 2003 with equity investments in other airlines such as Air Berlin, Alitalia and Jet Airways. All three carriers went bust. Etihad lost $1.87 billion in 2016.

Face, Happy, Head, Vijay Valecha says Etihad can expect significant international interest — Vijay Valecha says Etihad can expect significant international interest

A restructuring plan, initiated in 2017, resulted in the carrier reducing headcount, cutting its fleet size and focusing on core routes.

Under its “Journey 2030” strategy the airline plans to carry 33 million passengers and fly to more than 125 destinations by the end of the decade. It flies to 93 cities now.

“This is the best time to tap the market and get decent valuations for equity raise,” says Nishit Lakhotia, head of research at Bahraini investment bank and asset manager Sico.

The last Gulf airline to have an IPO was Sharjah-based Air Arabia in 2007 and, before that, Kuwait’s Jazeera Airways in 2004.

Saudi Arabia’s budget carrier Flynas is in the final stages of getting approval to launch an lPO, while rumours have long-circulated about a potential offering by Dubai-based Emirates and Qatar Airways.

Saudi Arabia’s newest airline Riyadh Air, which is expected to start operations later this year, may also be planning an IPO.

“It’s not a huge risk since it [the IPO] will be underwritten by someone at the end of the day and, if the market changes for the worst very quickly, then they could pull it,” says John Grant, partner at UK-based consultants Midas Aviation.

Last year eight companies sold shares in IPOs in the UAE, listing the shares on the country’s two main stock exchanges and attracting more than $7 billion in investment.

For shareholders, however, not all the investments have been a success.

UAE-based technology company Alpha Data has already announced plans to list 40 percent of its capital on the Abu Dhabi exchange.

“Etihad’s IPO would signal greater confidence in the region’s aviation market and thereby act as a catalyst among other regional airlines considering going public,” says Valecha at Century Financial.