Etihad Airways has released a report that it commissioned that says the three biggest US carriers—American Airlines, Delta Air Lines and United Airlines—have received benefits worth $71.48 billion over the past 15 years.
The report includes money that went to US airlines with which the three carriers have merged and the majority of the funds are related to restructuring under US Chapter 11.
The report, researched and compiled by international consultancy The Risk Advisory Group under a commission from Abu Dhabi-based Etihad, comes as the same
US carriers have embarked on a
campaign in which they allege that Etihad, Emirates Airline and Qatar Airways have received some $42 billion in state subsidies. The US carriers and some US labor groups say this contravenes the fair competition rules of the Open Skies agreements between the US and the UAE and Qatar.
The
US carriers want government-to-government consultations on the issue and a US government review is under way.
In a statement released late Thursday, Etihad said US airlines received benefits valued at $71.48 billion, more than $70 billion of which has been since 2000, “enabling the nation’s three largest carriers to transition from the verge of bankruptcy to today’s industry leaders, each achieving multi-billion dollar profits.”
The Risk Advisory Group, Etihad says, identified that the majority of benefits which accrued to Delta, United and American came from restructuring under
Chapter 11 of the US Federal Bankruptcy Code, yielding them at least $35.46 billion, and additional pension fund bailouts totaling $29.4 billion from the US government’s Pension Benefit Guaranty Corp.
Etihad general counsel Jim Callaghan, said, “We do not question the legitimacy of benefits provided to US carriers by the US government and the bankruptcy courts. We simply wish to highlight the fact that US carriers have been benefitting and continue to benefit from a highly favorable legal regime, such as bankruptcy protection and pension guarantees, exemptions from certain taxes, and various other benefits. These benefits, which are generally only available to US carriers, have created a highly distorted market in which carriers such as Etihad Airways have to compete.”
Callaghan told
ATW that the numbers were conservative and obtained from public records and statements.
The breakdown of the numbers, according to the report, apportion the large majority of benefits to United, with combined benefits estimated at $44.4 billion; followed by Delta at $15.02 billion; and American Airlines at $12.05 billion.
Of these figures, United achieved one-time bankruptcy debt relief totaling $26 billion, and pension termination benefits totaling $16.8 billion; Delta achieved bankruptcy debt relief totaling $7.9 billion, and pension termination benefits totaling $4.55 billion; and
American achieved bankruptcy debt relief totaling $1.56 billion, and pension termination benefits of $8.08 billion.
Callaghan said the claims by the three US carriers that they were being harmed by Etihad were baseless, and an attempt to obstruct higher-quality competition.
Callaghan told
ATW the report would form part of Etihad’s response to the US carriers’ allegations and would be submitted to the US government review.
“We are not going to get into a tit for tat. This is about having a balanced debate on this issue,” he said.
Callaghan added that the airlines are trying to characterize every dollar invested in Etihad by the Abu Dhabi government as a shareholder as a subsidy. “If you follow this line of argument you would also have to look at all other state-owned airlines such as Turkish Airlines and the Chinese airlines—many of whom are partners in the three US carriers’ global alliances.”
On Wednesday,
Qatar Airways Group CEO Akbar al Baker held a media briefing in Washington, DC to refute the subsidy allegations against his airline.