Etihad Goes West to Invest

Etihad Goes West to Invest

Abu Dhabi’s national carrier, Etihad Airways, is increasing its stakes with plans to invest in airlines in the west, adding to the number of routes it already goes. Etihad, the second largest airline in the United Arab Emirates (UAE), after Emirates Airline, is undergoing negotiations to align itself with European carriers: Alitalia, Air France and Air Berlin.

In the past week, Italy’s Alitalia has been in negotiations with Etihad over the possibility of a $343 million cash investment. Etihad has not yet decided if it will invest in the unprofitable, Alitalia, but are undergoing its due diligence before final decisions are made. If the deal is finalized, Etihad would have a 49 percent stake in Alitalia, which helps to intensify Etihad’s aggressive plans to expand into Europe.

Andria Giuricin, Professor at Milan’s Bicocca University commented, “Alitalia needs this investment.” Giuricin believes, “Etihad can take a big slice of the Italian market where Alitalia has the leadership.” The Italian government has injected $686 million into Alitalia to help keep the airline afloat. Alitalia operates in Europe’s fourth largest travel market, and routes nearly 25 million passengers a year, which would be a major benefit to Etihad’s plans for expansion. Etihad’s going west to invest correlates with its intent to be more competitive with regional rivals, Emirates and Qatar Airways.

Etihad already has an almost 30 percent stake in another European carrier, Air Berlin, and looks to realign the partnership between the two. Air Berlin has incurred losses due to competition from rivals such as easyJet, and a possible 49 percent increase in Air Berlin’s stake is being considered by Etihad. James Hogan, Etihad’s President and chief executive states, “We are in the final stage of negotiating the next phase of that partnership.”

After Etihad entered into a partnership with Air France-KLM as part of a code-sharing deal in 2012, the two are now discussing sharing revenues on global routes. KLM Chief Executive Camiel Eurlings says both carriers aim to conclude negotiations in a few months that will deepen the ties beyond the code-sharing deal.

Amidst its plans for expansion, Etihad is also intensifying its recruitment for pilots and other staff. Etihad visited India earlier this month to put on a road show to entice Indian pilots with prospective opportunities in store for them if they were to join the airline. The road shows coincided with Etihad’s launch of the Jaipur to Abu Dhabi route. Jaipur is now the tenth Indian city serviced by Etihad Airways.

Etihad’s recruitment specialist will be in Japan Mid-April to hold a cabin crew recruitment day in order to find qualified food and beverage managers and inflight chefs, who will undergo a seven-week training program conducted at Etihad’s Training Academy in Abu Dhabi. Etihad currently employs almost 100 Japanese residents, including 3 pilots. A recruitment day will also be held in London on April 28. Etihad currently employs over 1,200 British nationals.

Going West to invest has been profitable for Etihad. In 2013 the company achieved a revenue increase of 30 percent. Etihad already partners with Ireland’s Aer Lingus, Air Serbia and is anticipating the approval of a 33 percent investment in Switzerland’s Darwin Airline.

By Humphrey Bennett

Sources:
Bloomberg.com
Gulf News
The Wall Street Journal
Business Standard
Emirates247.com

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