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.
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