Government officials in the Seychelles have agreed to sell a 40 per cent stake in Air Seychelles to Etihad Airways as part of a strategic partnership alliance initiative.

Under the terms of the deal the national airline of the United Arab Emirates will invest US$20 million in the carrier, with the sum to be matched by an equal capital injection by the government of Seychelles.

The deal was announced by Joel Morgan, Seychelles minister of home affairs, environment, transport and energy and James Hogan, chief executive of Etihad Airways.

In addition, Etihad Airways will also provide a shareholder’s loan of US$25 million to meet working capital requirements and support network development.

Morgan said: “This is a game-changing strategic partnership for us, establishing Air Seychelles on a sustainable growth trajectory and offering a realistic way forward for long-term commercial growth.

“The partnership simultaneously provides international presence, strategic penetration and a bright future for our national carrier.”

“The aviation industry is under enormous pressure right now, with small airlines especially vulnerable to global economic instability and ongoing oil price volatility.”

Hogan explained the deal would allow Etihad to tap the increasingly important leisure markets of the Indian Ocean and Africa.

“The Seychelles is a renowned leisure destination and its tourism industry is surging, as indicated by record-setting visitor numbers for the island nation in 2011,” he explained.

“There is a need for greater connectivity to support this tourism boom, and both Air Seychelles and Etihad Airways are well-positioned to leverage that demand into substantial commercial growth.

“The integration of the networks will give Air Seychelles greater opportunity to tap into key tourism feeder markets across Europe – such as Germany, France, Italy and the UK – where Etihad Airways’ presence is strong and growing,” he added.

Asia, and more specifically China, is increasingly important to the Seychelles national economy.

Apart from the Seychelles strategic geographic significance as a stepping stone between China and Africa, the island nation is also an important trading partner for Chinese business and an increasingly popular leisure destination for significant numbers of Chinese travellers.

The agreement, which is the first of its kind in Africa, makes for provision for a five-year management contract for Etihad Airways which will see the implementation of strategic measures to encourage Air Seychelles’ long-term commercial growth.

Another important element of the agreement gives Air Seychelles office presence in Etihad Airways offices across the Etihad Airways network.

Etihad Airways is considered the World’s Leading Airline by the World Travel Awards.