Emirates And Etihad Merger Not Happening Any Time Soon

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Tony Douglas, CEO of Etihad, has poured scorn on the possibilities of an Emirates and Etihad merger. Describing such notions as ‘clownesque’, it’s the first public denial of the rumors to date.

Boeing 787 Etihad
Douglas has been quite clear that a merger will not happen. Photo: Etihad.

Rumors of an Emirates – Etihad merger have been floating around for months. Almost on a weekly basis, some blogger or other will elucidate on the benefits to both airlines of joining forces.

Despite massive efforts to trim costs and boost efficiency, Etihad posted a third consecutive year of losses. Their $1.28bn loss last year was no doubt compounded by decreasing passenger volumes, with the Abu Dhabi company reporting 800,000 fewer customers than the previous year.

As such, some would say there has never been a better time for Etihad to consider a merger with Emirates. However, a recent interview with the head of the airline has left us in no doubt that an Emirates and Etihad merger is just not happening.

Speaking to Arabian Business, Tony Douglas, CEO of Etihad, is quoted as saying:

“I often fall about laughing because when Bloomberg run that story, quite frankly it was the laziest piece of Thursday afternoon journalism I’ve ever seen. So, the clown who wrote it was probably no more than a clown as anyone could have wrote the story, quite frankly. But, not surprisingly, as a result of said clown writing said clownesque story, I’ve been asked this question ten thousand times.”

It’s the first time a senior official has publicly debunked the rumors. Emirates president Tim Clark has previously said it was ‘early days’ to talk about such a merger, but neither carrier has previously denied outright the possibility of a merger.

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Clowning around with partnerships

It’s easy to see why some might assume a closer cooperation between Emirates and Etihad might be on the cards. With Etihad literally hemorrhaging money with each passing year, turning the Gulf Three into the Gulf Two would give both airlines a head start over the competition.

Etihad are somewhat infamous for their airline partnerships. At one point, they were almost a quasi-alliance with numerous stakes in airlines around the globe. However, it seems Etihad have been burned one too many times.

Alitalia
Etihad have lost a lot of money investing in Alitalia. Photo: Alitalia

Their ill-advised 49% holding in Alitalia proved to be a massive drain on resources, and they’re not having the easiest time of offloading it either. A partnership with Air Berlin ended with the German airline going bust, leading to a messy legal battle between the two carriers. Although they retain a stake in India’s troubled Jet Airways, they’ve been clear they won’t give the carrier any more money, and we wouldn’t be surprised if they eventually get shot of that share too.

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They still have investments in Air Serbia, Air Seychelles and Virgin Australia, and haven’t indicated any plans pull out of these. With all three airlines in relatively good financial health, there’s no reason to. Yet.

Staying closer to home

Etihad are clearly revising their strategy on the way they work with other airlines. Recently they’ve announced an expansion of their code sharing with Saudia and have launched a new code share partnership with Gulf Air too. Douglas commented on this to Arabian Business:

“We are not going to repeat the previous strategy, described as a quasi-alliance where sometimes taking quite small shares in other airlines where we don’t have control. What we do see is fantastic opportunities to build business partnerships.”

Despite posting another loss last year, Etihad are starting to show signs of improvement. Last year, costs were $416m lower, and expenses reduced by $190m. They’ve been working hard to trim down services to boost productivity, scrapping underperforming routes and adding capacity on profitable ones.

Despite the balance sheet for Etihad still firmly in the red, things are looking up for the Middle East airline. Let’s hope 2019 can be another step on the road to recovery for them.

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