Crazy days at Etihad, and possibly more to come

Etihad’s European investments continue to create all sorts of excitement for the company. And not really in a good way. The deals have been terrible economic decisions for Etihad, costing the company billions of dollars (or euro or dirhams). And now it appears that the efforts may cost CEO James Hogan his job and see Air Berlin completely fold into the Lufthansa group, more than is already in play.

Hogan has been at the helm of Etihad for just over a decade, overseeing the carrier’s meteoric growth, fleet expansion and also the company’s global ambitions. Under Hogan’s guidance the carrier formed the Etihad Global Partners group, investing in significant ownership stakes of many airlines, including Air Berlin, Air Seychelles, Aer Lingus, Virgin Australia, Air Serbia, Darwin Airline (now operating as Etihad Regional), Jet Airways and Alitalia; Air Malta is reportedly on the block as another potential investment option. The Aer Lingus stake was sold when IAG bought out that airline. The rest of the investments have not performed nearly as well. Air Berlin has cost Etihad more than a billion dollars on its own over multiple transactions. Alitalia is losing half a million euros each day still, despite Etihad’s investment and promise to turn the company around. Virgin Australia is far from a shining star, either, with significant debt and a recent call on its investors to sink more cash into the operation. Air New Zealand chose to walk away, selling the bulk of its stake over the summer.

And now, according to reports on consecutive days from Handelsblatt, a German news outlet, Air Berlin is set to fold into Lufthansa with the appointment of a new CEO and Hogan may be looking for a new job.

Folding Air Berlin into Lufthansa consolidates the German aviation market in a massive way. There will still be competition within the European markets from Ryanair (including a new base opening at Frankfurt in 2017), easyJet and other LCCs, plus long-haul competition from Condor. And there are plenty of other airlines flying long-haul out of Europe, though not as many from Germany directly, though that could change.

Oh, and there’s also the part where Lufthansa and Etihad will start a limited codeshare operation, proving that the mantra “never say never” is probably a very, very good idea.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, and LinkedIn.


    1. Pretty sure CEO is not for me. But I’d love to do a stint in route/network/fleet planning or product. Loyalty would be good, too, though that’s a much different gig in that part of the world. But so much potential…

    2. RM would be fun, too, but I think the route/fleet stuff would be more interesting to me.

      But who am I kidding…I’d take any of those in a heartbeat if an airline was willing to let me inside.

  1. I do not get air Berlin. In the past 5 months, I have flown them twice across the Atlantic and three times within Europe. The planes have been packed every single time in all cabins. Their problems do not seem to come from the lack of business.

    1. At what price?

      Filling planes is easy if you make the fares cheap enough. And they just sent me two random, unsolicited discount vouchers to further cut their revenues.

    2. I think part of the problem is on the cost side. The numbers just aren’t low enough. From what I can see the CASM is north of 12 cents which is is nearly double what Ryanair sees. Competing in the intercity European market like that, without a solid long-haul market to feed to/from is not sustainable.

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