Switzerland’s Federal Office of Civil Aviation (FOCA) has given regional carrier Darwin Airline and Etihad Airways until Sept. 30 to satisfy the agency that the smaller carrier effectively remains under the control of Swiss or European Union citizens.
Etihad announced plans to take a 33.3% stake in Darwin in November 2013. The regional airline was rebranded as Etihad Regional in January, with the aim of funneling traffic into the Etihad network from secondary and tertiary airports around Europe.
Swiss law requires that companies within the country’s borders remain under the control of Swiss or European Union citizens. FOCA has been investigating whether Etihad’s stake—although less than 50%—violates that by giving it effective control of Darwin. The regulator said that Abu Dhabi-based Etihad has not yet completed the transaction to acquire shares in Darwin.
In a statement last Thursday, FOCA said that—following an initial examination of the proposed deal—it had concluded the “cooperation mechanisms” between Etihad and Darwin would lead to effective control passing to the Arab carrier. It declined to give details on grounds of commercial confidentiality.
It added that, on June 30, it had given the parties until Sept. 30 to adjust their agreement to bring it into line with Swiss regulations. FOCA would then review the arrangement again.
If the arrangements were altered satisfactorily, Etihad’s investment could go ahead. If FOCA found the arrangements still breached Swiss rules, the regulator would cancel Darwin’s operating license, although the Swiss carrier would have the opportunity to make further representations on the matter.
In a statement Monday, Etihad said it was “comfortable” with the FOCA review process.
It said it had been working with FOCA to amend the agreement to ensure its compliance.
“We … understand and support the need for there to be absolute clarity that Etihad Airways does not, cannot and will not exercise control over Darwin Airline,” Etihad president and CEO James Hogan said. While our initial agreement has required amendment, we are seeking, as any minority investor would, protection for our investment. This is about protection, not control,” he said.
“Etihad Regional was, and will continue to be, majority owned by Swiss shareholders and operated by Swiss management. We have a high regard for the management of the business and its capability to build a stronger regional airline that increases competition and choice for air travelers, especially in Switzerland,” Hogan said.