Etihad Airways is reviewing its strategy of investing in European airlines and is seeking an exit in a shake-up that could lead to the departure of group CEO James Hogan, company and industry sources told the Reuters news agency. Etihad saw a strategy to take equity stakes in carriers like Air Serbia, Air Berlin and Alitalia as a way to expand its European network but losses have mounted with Air Berlin and Alitalia failing to turn a profit. On the other hand, Air Serbia, in which Etihad holds a 49% stake, has posted two successive years of profit (2014 and 2015). Etihad announced on Sunday it was cutting jobs, with local rival Emirates following a day later in reviewing its workforce as overcapacity and a stronger dollar squeeze earnings.
Mr Hogan's expected departure could come within the next three months according to the German daily "Handelsblatt", which cited several sources as saying Etihad wanted to start unwinding its European investments in January. "It is our long-standing policy never to comment on rumour or speculation", Etihad said in a statement. Last week, the UAE carrier finalised a deal for Air Berlin, in which it owns a 29% stake, to lease 38 crewed planes to Lufthansa. It is also buying Air Berlin's Niki unit and placing it into a new leisure airline joint venture with tour operator TUI. The measures will halve Air Berlin's fleet, leaving it with just 75 planes focused on long haul flying from Berlin and Dusseldorf. Alitalia is considering job cuts and grounding planes, and Italian media have previously suggested that Lufthansa could become an investor in the struggling carrier, something that both have denied.
|Etihad ownership stakes in other carriers (click to enlarge)|
Etihad and the Serbian government signed a five-year investment and management agreement in 2013 for Air Serbia. In an interview to the "N1" network this July, Mr Hogan indicated that Etihad's involvement in the Serbian carrier would continue past the initial five-year deal. "Air Serbia today is an integral part of our group. We entered this partnership for the long-term, we are not here for the short-term. But what is important is that we grow the business in a measured way. We want this business to be successful in the long-term, we want this business to continue its network coverage, we want to improve the depth of the network", Mr Hogan said at the time. Air Serbia handled over 2.55 million passengers so far this year, it's best since rebranding from Jat Airways three years ago. Furthermore, it recently announced plans for a step-change in business in 2017. Last week, at the Southeast Europe Aviation Summit, Mr Hogan said, "We are totally committed to the future of Air Serbia. While on the one hand there are some challenges, on the other there are huge opportunities". According to the head of the Etihad Aviation Group, the company is currently in talks to open a call centre in Serbia to service its European partners. Etihad is also reviewing MRO (Maintenance, Repair & Overhaul) opportunities in Serbia as well.