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Etihad review of strategy ‘could involve shakeup’

December 23, 2016 Headline News No Comments Email Email

Etihad is reviewing its strategy of investing in European airlines such as Air Berlin, Alitalia and Air Serbia, and a pending shakeup could lead to the departure of chief executive James Hogan, according to reports.

Etihad announced last Sunday it was cutting an unspecified number of jobs. It did not indicate where the cuts would occur.

“Etihad Airways is operating in an increasingly competitive landscape, against a backdrop of weakened global economic conditions,” the airline said in a statement.

German business daily Handelsblatt published a report earlier this week, saying that “multiple independent sources” speaking on condition of anonymity had said that a shakeup was pending that could lead to Hogan’s departure.

Contacted by Global Travel Media about the Handelsblatt story, a spokesman for Etihad Aviation Group said yesterday: “We do not comment on unsubstantiated rumours in the marketplace.”

Reuters ran a report that “company and industry sources” said that Hogan’s departure could come within the next three months.

Etihad has in recent years sought to expand its presence in Europe, buying a 29% stake in Air Berlin in 2011, then buying Air Serbia in 2013 and a stake in Alitalia three months later.

The airline now wants to shift strategy and roll back its European businesses, Handelsblatt said.

Etihad last week finalised a deal which will see Air Berlin wet-lease 38 planes to Lufthansa. It also announced a codeshare deal with Lufthansa for certain routes.

James Hogan is a highly respected airline chief, originally from Melbourne, who began his career in 1975 at Ansett Airlines and subsequently held senior positions with British Midland International, Hertz Corporation, Forte Hotels, and Gulf Air.

In May this year, the Australian newspaper reported that Hogan had revealed that the Abu Dhabi-based airline had started planning for life after his eventual departure from the top job. The paper said Hogan had no plans to leave Etihad anytime soon. Hogan has been president and chief executive of Etihad for over a decade, during which time the carrier has gone from revenues of USD 300 million to USD 25 billion (including those of its partners).

In April this year, Etihad announced the strongest annual financial result in its 13-year history, an annual net profit of USD 103 million on total revenues of USD 9.02 billion. The performance, which marked the airline’s fifth consecutive year of net profitability, also saw earnings before interest and tax of USD 259 million and earnings before interest, tax, depreciation, amortisation and rentals of USD 1.4 billion, representing 16% of total revenues.

Also this year, Eithad won Air Transport World’s airline of the year award.

The airline has an awesome reputation for quality and service. The Wall Street Journal pointed out recently that Gulf carriers, including Etihad, face increasing competition, with Lufthansa setting up a budget long-haul unit to better compete with the Gulf carriers and Air France-KLM planning a similar move.

Written by Peter Needham

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