News
Etihad insists airberlin strategy is “the right one”
May 5th 2017
"We are seeing the first structural changes that are necessary to create a sustainable future for airberlin," Etihad Airways Group CEO, James Hogan, said in a statement, insisting Etihad’s partner model was the right strategy. Read More »
Hogan’s announcement came in response to airberlin reporting a record 667 million Euro (US$730 million) operating loss for 2016, more than twice the 2015 level. This year has not started well. Airberlin’s first quarter operating loss widened 58% year-on-year to 272 million Euros.
Etihad owns 30% of the German carrier and has backed multiple bailouts of the airline.
Airberlin has struck a deal with Lufthansa, which sees the rival carrier take 38 aircraft from airberlin’s bloated fleet, while another 35 airplanes that serve leisure routes are being transferred to airberlin’s Austrian subsidiary, Niki. Once the transaction is completed, airberlin will sell Niki to Etihad and then the Emiratis plan to launch a new leisure carrier as a joint venture with TUI AG's aviation unit.
Last Friday, Germany’s reputable Focus magazine reported that Lufthansa Group CEO, Carsten Spohr, would travel to the Gulf next week to discuss financing a possible takeover of airberlin with Etihad. Lufthansa confirmed Spohr will be on a trip, accompanying chancellor Angela Merkel in the region, and declined to comment further.
In February, Etihad Aviation Group and Lufthansa Group signed a comprehensive “commercial partnership agreement” covering maintenance, repair and overhaul (MRO), catering and codesharing. And, if the rumours are true, Etihad Airways could join the Star Alliance network before year-end.
The CEOs of both companies highlighted their views that the partnership was critical to competing effectively in today’s “complex and highly competitive global market”.
"Our collaboration with one of the aviation industry's most established and recognised brands is undoubtedly the most significant non-equity partnership with an airline we have ever announced,” Hogan said and added this was the foundation of a much wider strategic collaboration between the two airline groups.
Etihad’s partners model is facing headwinds from every direction. Loss-making Alitalia looks ready to to fade away after its workforce rejected a restructuring plan which management had presented as the only alternative to bankruptcy. Etihad owns 49% of Alitalia.
Lufthansa has ruled out a takeover of Alitalia. “We are clearly not here to buy Alitalia,” Lufthansa CFO, Ulrik Svensson, said during a teleconference on Lufthansa’s first-quarter results. The Lufthansa Group has booked a net loss of 68 million Euros to March 31, but its outlook is positive.
Adjusted first quarter operating income, or underlying profit stood at 25 million Euro, a marked improvement on a 53 million Euro loss in the first quarter of 2016, on the back of revenues up 11.2% at 7.7 billion euros.
“For a period that is traditionally difficult for the airline industry, we have posted our first positive earnings result since 2008,” Svensson said, pointing particularly at the contributions of Lufthansa Cargo and Lufthansa Technik for the improved result.
The Lufthansa Group maintains its fiscal 2017 guidance, projecting “substantially higher revenues” than 2016’s 31.7 billion Euro and “slightly lower” adjusted operating profit than the 1.75 billion Euro it earned last year.
