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Tue 24 Jan 2017 01:50 PM

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Etihad chairman says airline equity partnerships need to be 'adjusted'

Mohamed Mubarak Fadhel Al Mazrouei says the airline must continue to improve cost efficiency, productivity and revenue

Etihad chairman says airline equity partnerships need to be 'adjusted'

The chairman of Etihad Aviation Group has confirmed the company will “adjust” its airline equity partnerships.

Mohamed Mubarak Fadhel Al Mazrouei said the group, which includes Etihad Airways, needed to “improve cost efficiency, productivity and revenue”.

“To position the company for continued success in a challenging market, the Board and management team will continue an ongoing, company-wide strategic review. We must ensure that the airline is the right size and the right shape,” he said in a statement on Tuesday.

“We must continue to improve cost efficiency, productivity and revenue. We must progress and adjust our airline equity partnerships even as we remain committed to the strategy.”

In the same statement, the Group announced that James Hogan would step down as president and CEO in the second half of 2017. He had moved into that position in May 2016, to allow Peter Baumgartner to take over the daily operation of Etihad Airways.

The Group’s chief financial officer, James Rigney, also will leave in the second half of the year. Etihad said it had already started looking for replacements for both positions.

Last month, Etihad Airways unveiled plans to create a new European leisure airline group in a joint venture with TUI AG in what it hopes will enable it to better leverage synergies and economies of scale through its equity partners. The transaction is subject to approvals by aviation regulatory bodies and anti-trust authorities.

Etihad also is involved in a new restructuring plan for Italian airline Alitalia, in which it paid $2.4bn for a 49 percent stake in 2014.

Al Mazrouei suggested Etihad was not currently planning to sell any of the equity partnerships.

“Etihad is a great business with strong fundamentals and a deeply experienced aviation and airline management team. These assets, along with a realigned organisation, provide more agility and added focus as Etihad enters the next phase of its development.”

Last week, Hogan told a conference in Dublin that Etihad remained committed to the strategy.

“Our investments had an immediate impact on the revenue side, delivering hundreds of millions of dollars in additional revenues and allowing us to fill our onward connecting flights,” Hogan said.

“Those benefits have been replicated in all our minority investments – in airberlin, Alitalia, Jet Airways, Virgin Australia, Air Serbia, Air Seychelles and Etihad Regional.”

In an opinion piece written exclusively for Arabian Business this month, Hogan defended the equity strategy.

“Our equity partners provide unparallelled access to key markets and together, we offer a very strong service proposition into Europe, Africa, India, and Australia. In fact, the Etihad Airways network alone grows to more than 600 destinations with equity and codeshare partners,” he wrote.

He described the current global aviation operating environment as “challenging”.

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