Etihad Won't Be Reduced to `Boutique' Airline Status, CEO Says

(Bloomberg) -- Etihad Airways PJSC intends to remain a major global carrier as it works on re-sizing its global business following record losses, according to new Chief Executive Officer Tony Douglas.

The Persian Gulf company, which has built up a vast inter-continental route network and spent billions of dollars on plane purchases, has no intention of becoming a “boutique” operator and still aspires to being an “airline of choice,” Douglas said Monday in Abu Dhabi, where Etihad is based.

At the same time, failed investments in Alitalia SpA and Air Berlin Plc -- which both filed for insolvency last year after Etihad pulled the plug on funding -- have led to a more “strategic” approach to expansion, according to Douglas, who took over in January.

“That would be the take out, to be very disciplined, very measured,” Douglas said at the 2018 Global Aerospace Summit. “What we have embraced properly is a way to develop growth in a sustainable way. We will choose wisely; we will make sure that detail is well-attended to.”

Etihad has been working on restructuring plans for the best part of a year after posting a $1.87 billion loss for 2016 that cost previous chief James Hogan his job. While the carrier has slimmed down its freighter fleet and is cutting passenger destinations including Edinburgh and Perth, Douglas has so far held off from announcing widely anticipated plans for further fleet and network cuts.

According to one scenario, Etihad could give up on chasing global standing in the mass market and double-down on targeting top-end travel, where it's one of only 10 five-star airlines worldwide.

Adolescent

The airline remains a relative “adolescent” in aviation terms, the CEO said, and will “look to learn” from Emirates, the biggest of the three main Gulf carriers and the world leader on long-haul routes. Etihad was founded in 2003, 18 years after the Dubai-based company and nine after Qatar Airways.

Douglas held out the prospect of closer cooperation with one-time rival Emirates, touted for a possible merger since Etihad fell on hard times. “I do admire what I observe from our great friends in Dubai,” he said. “We will continue to consider where appropriate the things that we could do together.”

Emirates President Tim Clark has said antitrust rules give limited room for maneuver and that a merger is unlikely, though ultimately a matter for the rulers of Dubai and Abu Dhabi. The airlines also both have small home markets and compete for the same passengers changing planes on long-haul trips.

Etihad poured billions of dollars into struggling airlines around the world under Hogan's so-called Equity Alliance strategy in a bid to quickly add more customers and propel the company into the global aviation elite. Earnings were hurt by a decline in Mideast traffic after lower crude-oil prices weighed on oil-industry travel, as well as mounting loss at Alitalia and Air Berlin.

To contact the reporter on this story: Mahmoud Habboush in Abu Dhabi at mhabboush@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper

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