Etihad Airways has said it will not divest from carriers in which it holds ownership stakes after completing a comprehensive strategic review of its partner airline strategy, which saw it pull out of Air Berlin, Alitalia and Darwin Airline. Etihad Airways' CEO, Peter Baumgartner, told the UAE's "National" daily, "There are no plans to step out of any of the existing partnerships at this stage. From a shareholder perspective, Alitalia and Air Berlin have not been unimportant, but let’s not forget we have over fifty codeshare partners, many of whose commercial operations benefit Etihad. We have always been a business that has been built on partnerships, so there is life beyond Air Berlin and Alitalia". Besides a 49% stake in Air Serbia, Etihad also has a 40% share in Air Seychelles and holds ownership of 24% of both Jet Airways and Virgin Australia.
Despite sticking with its equity partners, Etihad will put a greater focus on its own point to point traffic, rather than transfer passengers from affiliated airlines. "Another part of our renewed focus is the point-to-point markets, which is the direct traffic, because this is the more lucrative traffic with a high price sensitive flow through Abu Dhabi. There are also no plans for new aircraft orders. The Boeing 787 Dreamliner still forms the backbone of our fleet”, Mr Baumgartner said. The airline will continue its cost cutting measures throughout 2018 but will not seek a merger with fellow UAE carrier Emirates, as some reports have claimed.
Etihad and the Serbian government signed a five-year investment and management agreement for Air Serbia in 2013, which came into effect on January 1, 2014, with the option of extending the deal for another five years. The Emirati airline had previously said it was “fully committed” to its 49% stake in Air Serbia following reports it was considering reducing its share in the carrier. Recently, Air Serbia said, "The Government of the Republic of Serbia and Etihad Airways are fully committed to the strategic partnership with Air Serbia. The national flag carrier has started the process of consolidating its business, reducing costs and increasing efficiencies, in response to changing market conditions". The airline has also finalised a five-year plan to prepare it for the next five years of Etihad's involvement in the business.
..."at this point".
ReplyDeletePrecisely, the article in The National newspaper is not worth the paper its written on. This sort of rhetoric was also stressed over and over again regarding Air Berlin and Alitalia and we all know what happened there shortly thereafter.
DeleteThe new CEO is realistic, he has placed his priorities straight, and no one can blame him for that. Saying that, JU is not a priority for EY and it will seek and find a way do disinvest as it will in other airlines it holds a stake in.
And this is nothing anti-JU or EY, just simple survival mode for a terribly 'ill' airline on the verge of Swissair scenario.
Etihad we once knew, full of cash and dreamy goals is gone. Look out for more tight controls, staff cuts, routes consolidations and painful maneuvers so that it can regain at least cash-neutral position. The same will be applicable to JU.
Agree with everything anon 9.10 said.
DeleteIt is normal that they say "at this point". You never know what the future will hold and you don't want people to call you out on your previous statements. Better to be safe than sorry.
DeleteSo much for all the conspiracies.
ReplyDeleteExactly. People were saying how Etihad was pulling out and Hainan taking over lol.
DeleteBut maybe the government should consider ending an agreement with Etihad and finding a more proactive partner willing to invest in its subsidy.
DeleteDon't forget the conspiracy that Eurowings was taking over Air Serbia.
DeleteOr tha 4K Invest was taking over Air Serbia.
DeleteYou do know that Etihad announced that they are dedicated to Air Berlin and will not pull out just 2 weeks before they actually did that. Pull out and leave Air Berlin to bankruptcy.
DeleteAir Berlin and Air Serbia are not the same.
DeleteExactly. So much for divestment and conspiracies.
DeleteWhat conspiracies? They divested from Air Berlin, Alitalia and Darwin. I would not call that a conspiracy.
DeleteBut they did not and will not divest from Air Serbia like many here predicted and neither did the Chinese come to buy a stake in Air Serbia, again like many predicted.
DeleteThe CEO might want a marger with Emirates but I highly doubt local Sheikhs will be too happy about it. For them these airlines are a matter of national pride.
ReplyDeleteAlso, it makes no sense for EY to focus on O&D when they have so little of it once you exclude 'Asian worker routes' and regional flying.
That said, I guess that puts an end to any chances of seeing them add more flights/seats to Belgrade.
The CEO says that they are not seeking a merger with Emirates.
DeleteI still don't get why they are not acting on increasing BEG flights. Their LF is very high on the BEG route. Perhaps the yields are not there.
Ah ok, I missed the 'not' part. Thanks.
DeleteActually, funny thing is that BEG is listed as one of Etihad's best performing routes in terms of yields. It's in top 10.
That said, I wouldn't be surprised if the performance worsens given that connectivity was severely affected once Air Serbia suspended AUH. Would be nice if JU returned to AUH, even with three weekly flights.
We will have to wait and see what they do next summer. I wouldn't be so sure that additional frequencies won't be added.
DeleteI think there are greater chances of flydubai or Qatar adding flights than Etihad but we will see. I guess they are happy with the yields and they don't want to risk it.
DeleteWe will have to wait and see what happens in the end.
Its impressive that BEG is served by FZ, QR and EY (plus TK) and all are doing great
DeleteI would also add Pegasus and Atlasjet. They might not have the Asian or African network but they are after transfer passengers flying between BEG and the Middle East.
Delete@ Anon 9:31
Deleteand all of them having daily flights
Barem trecina putnika ide na odmore za razliku od "prebogatih" slovenaca koji ne mogu da dovedu nijednu kompaniju kod njih.
DeleteSlovenci u proseku jesu bogatiji od Srba. Činjenica.
DeleteSrbija ima 7 miliona stanovnika, a Slovenija 2. Činjenica.
Prema tome, logično je da će u apsolutnom broju Srbija imati više "dobrostojećih" ljudi koji mogu sebi da priušte odmor na egzotičnim destinacijama.
What happened to all that talk that Etihad would start sending an A330 to BEG?
Delete^ let's wait and see.
Delete@ anon 11:32
DeleteApaurin...
Anon 12.16
DeleteEtihad never considered sending the A332, that as just a rumour that someone started on here. That said, they did consider sending their A321.
Qatar did it before. They're pathetic.
DeleteQatar did it even twice! Then again they seem to be far more aggressive on the Serbian market.
DeleteIf Etihad is not taking on more new aircraft it means they will defer the A320neos they ordered, part of which was supposed to go to Air Serbia.
ReplyDeleteIt does not say that at all. It says that Etihad won't be ordering new planes, not that it is not accepting planes which it has already ordered.
DeleteYou are right. I misread.
DeleteThe bottom line is Etihad won't be investing anything into JU over the next 5 years. They will officially own 49% but there will be no benefit for Air Serbia except passengers being able to earn Etihad miles. If they don't cut that as well like they have cut everything else.
ReplyDeleteThe frequent flyer programme was already butchered a few months ago.
DeleteI agree. Some people thought that After disposing of Air Berlin and Alitalia they will focus more on JU, but that doesn't seem to be the case.
DeleteSo, what is the actual ongoing benefit of this investment for each airline at the moment. What are the synergies?
DeleteJU is not paying dividends, however EY may be getting above market rates for leasing the planes. As for the value of the stake in the airline, it's anyone's guess.
What about JU ? If airmiles and connectivity are not there and EY is not pumping any resources anymore...
How much does Etihad actually invest in JU?
DeleteThey made an initial investment of $200 million.
Delete^^ Yes but that was in form a loan wasn't it?!
DeleteIt was not $200m to start with.
DeleteIn any case, if there are no ongoing benefits/synergies from the investment, they might as well divest it. They may not be investing on an ongoing basis, but if they are not benefiting on an ongoing basis, then it's not strategic or core to EY. EY is not a long-only hedge fund to rely on appreciation of their stake in the company. I don't think that with passing of time their stake would appreciate much in any case. They need to focus on core activities and cut links to Hogan's disatrous legacy.
60 million USD + 40 million loan.
DeleteI also find it hilarious that they will be focusing more on P2P. I mean 90% of your traffic are transfer passengers.
ReplyDeleteAgree. There are only 1 mio inhabitants in Abu Dhabi - surrounded by mostly desert and sea.
DeleteP2P is rather neglegible, especially if you mostly have wide body routes/planes with more than 230-500 costly seats per flights.
This was expected. EY will not focus more on JU, but it also will not leave JU. They have no additional costs from that partnership.
ReplyDeleteAS can surely survive without EY...at least as long as the government is backing the airline.
DeleteBut isn't it part of the privatization contract that EY has to invest into the airline...?
No, it's not, they "don't have to, but can if they want to". JU can not survive without EY and without 50-60 million EUR financial support of GoS. Does GoS really have that kind of money on long run?
DeleteNaravno. Mnogo vece pare prze u druge projekte.
Delete50-60 are peanuts for a country of this size if there is the willingness
DeleteI can't quite buy the argument that they are spending more money on other projects. Just because they spend it elsewhere doesn't mean they should spend it on JU.
DeleteIf GoS doesn't cut subsidies, it is not inconcievable that EU would politely 'ask' GoS to suspend the subsidies as the practice is illegal by EU standards. Before someone says the obvious technicality that Serbia is not in EU and not bound by the rules, let me just say that they can do as they please and our hand is weak (nit sure we actually have it at all), as evidenced in other more important issues.
To sto ti mislis je potpuno beznacajno. Postoje zakoni koji to regulisu. Vidimo kako se lako izigravaju zakoni u EU zasto bi to bio problem u SR. Dok im ne dopizdi ili dok gradjani ne zareze mogu taj sitan novac da ulazu u kompaniju to je godisnje deset dolara po putniku na BEG mnogo vise daju neki gradovi za Wizz i RA. I to nije ozbiljan novac ako ne pricas sa ovdasnjim "platisama" poreza koje pas nema za sta da ugrize. Imaju oni mnogo preca posla pravosudje, korupcija, privredni kriminal, slom Todoricevih firmi, izgradnja infrastrukture. Zamisli samo da godisnje pare uloze u izgradnju Ladjevaca, Ponikvi i zavrsetak Nisa.
DeletePa svi bi im glasali za njih u tim sredinama. Sve dok iz prikrajka rade Dinkic, Vlahovic i Labus nema boljitka u Srbiji.
Yes, EU laws are 'bent' all the time, but only by/for the likes of LH and Germany, not JU and Serbia.
DeleteThere are other areas where €50m would be better spent. If JU can be come sustainable on ~€10m subsidy per year, that would be acceptable.
Air Serbia is one of the best bets they msde.
ReplyDeleteYou are right. I doubt they have had a more compliant partner than the GoS, wasting tax payers money.
DeleteThey got paid by the government to take half of the airline. That was a great "investment" by Etihad!
DeleteRemember the state of Jat before Air Serbia. Of course the government had to pay. Same way the Slovenian government paid to 4k invest to buy Adria.
DeleteYeah, Slovania onvested close to 1mil€, Serbian government is now standing somewhere between 400-500mil€
DeleteGreat comparation
How much money did the Slovenian government give to Adria for which it was investigated by the EU?
DeleteP.s tbe Slovenian government gave 3.1 million euros to 4k invest. Not "close to 1 million" like you made up.
DeleteBetween Air Berlin and Alitalia, of course it is...
DeleteI personally no longer trust a word EY says.
ReplyDeleteThey also said they would retain their stake in Air Berlin just months before the pulled the plug.
ReplyDeletePreparations need to be made for a future without Etihad on board.
DeleteEY can not lose any money in Air Serbia. All costs are covered by the government.
DeleteNot months, but just 2 weeks before that.
DeleteInteresting times ahead. I hope Etihad finds a solution to its own problems that does not affect Air Serbia.
ReplyDeleteThe only solution they could find is for oil prices to go up.
DeleteHad they lead a healthier business when prices were high and roses were booming they wouldn't be in this mess today.
DeleteThey still would. It was much to much! Even for the richest owner. Kingfisher debts were much smaller, and owner was rich as hell but still did not survive.
DeleteOT
ReplyDeleteFrom 20.06.2018 Swiss will add a third weekly flight between ZRH and INI to be operated every Wednesday.
ZRH-INI 11.45-13.40
INI-ZRH 14.25-16.35
Talking of Swiss, from 05.04.2018 they will be increasing ZRH-BEG to 18 weekly.
DeleteThree daily flights on Thursdays.
BEG-ZRH-BEG
06.55-08.35 / 09.20-11.15
12.20-14.00 / 14.40-16.30
17.35-19.20 / 20.00-21.50
WOW! Nice for Swiss! They are definitely not giving up on Serbia!
DeleteIt seems they will have one plane which will only fly to Serbia (BEG & INI). 18+3=21 and the times match. Right?
DeleteI think they will all be operated by different aircraft.
DeleteINI is scheduled to be operated by the CS100 on Wednesday.
The morning flight to BEG on Thursdays is on a CS300 while the other two are on the A320.
CS100 - 125 seats
CS300 - 145 seats
A320 - 168-180 seats
What is interesting is that their flights won't overlap with ASL. Great for consumer.
DeleteZRH will always work with the huge Serbian diaspora!!
DeleteThere is A LOT of competition though with Air Serbia, Swiss, Wizz Air and easyJet all flying to Switzerland.
DeleteWhich is the main transfer hub to North America for passengers originating from BEG? (besides, of course the flights with JU)
DeleteMy guess is FRA as even in winter LH sends A319/320 while a few years ago they used to send the CRJ during the slowest period.
DeleteAMS should be in close second.
Thank you Nemjee for the info. Precisely speaking there will be 16 flights to BEG (and 3 to INI), not 18. Two additional rotations are on Tue and Thu in the morning, both operated by CS300 which is really nice.
DeleteI want back on BEG-GVA route! :)
DeleteYes... 15 from BEG. :D Thank you, I was never good at maths. lol
DeleteAnon 04.37
I am waiting to see what easyJet does, I have a feeling we might see a fourth flight this summer.
That's an understatement.
DeleteAt this stage everything is a guessing game when it comes to EY-JU. But I do think they will renew their agreement for another 5 years.
ReplyDeleteEY will remain a partner of JUs if the Serbian government offer lucrative incentives to UAE, which it is doing.
DeleteThe only thing that we get from this partnership now is Dane Kondic and I don't see the need for it.
ReplyDelete"Idi Dane da nam svane" like someone said here :D
DeleteThe thing is, when the time comes to sign a new 5 year agreement I have a feeling Serbian government will not be as generous as they were 5 years ago. Will EY agree on new terms? We will see. But with the way things are right now, I think Air Serbia would be able to live on its own.
ReplyDelete+1
DeleteI agree. I assume Etihad will stay part of Air Serbia but I doubt under the same conditions and they will probably renegotiate the agreement.
DeleteAs I've said all along. There is no good reason for Etihad to divest from Air Serbia.
ReplyDeleteAs long as they do not have to give a single penny to JU, they will remain committed.
DeleteOf course there isn't. It is the only one that has had any sort of success since it was taken over and it was political and not a financial investment.
DeleteI'm still waiting to see what impact Air Berlin's demise will have on Air Serbia. Look at the back of the Elevate publication for October with Air Berlin codeshare destinations on the map and then for November without them. More than half of the destinations on the map have been wiped out.
ReplyDeleteBolje pogledaj skok avio cena u Nemackoj. Prokuckace.
DeleteBravo Abu Dhabi!
ReplyDeleteIf the deal is five year then it will be up for renogitation next year. Let's see if some of the terms change.
ReplyDeleteEY should play a more proactive role in Air Serbia like they did during the first two years.
DeleteNot sure whather this is good or bad news haha
ReplyDeleteWe will have to wait and see.
DeleteEtihad is "committed" to Air Serbia because their investment was not made because they thought it would bring them money (unlike Air Berlin and Alitalia) but because they were ordered to buy them by the Sheikh for political reasons. At the beginning even Hogan said he would never have took Jat if the Sheikh didn't point it out. Later he changed his story a bit and said how they always thought Jat was a great investment.
ReplyDeleteEY instantly started to gain return on its investment in JU.
Deletegood news
ReplyDeleteWhat's good about it?
DeleteGood to know.
ReplyDeleteThought so.
ReplyDelete"Another part of our renewed focus is the point-to-point markets, which is the direct traffic, because this is the more lucrative traffic with a high price sensitive flow through Abu Dhabi."
ReplyDeleteThis is really surprising.
They are singing the same tune as Air Serbia.
DeleteExactly the same. I even saw a statement by Etihad CEO how this is "evolving the business". Kondic used exactly the same phrase.
DeleteBecause the press releases and phrases are cooked up by the same people - Etihad PR.
DeleteAir Serbia and Air Berlin are 2 different scenarios. The similarities end at both being unprofitable.
ReplyDeleteTo sum up things, I think that Air Serbia is suffering from poor decisions at both ends, EY and the Serbian government:
- EY I believe failed to properly analise the Serbian market, pushing a premium offer for a market that simply can not sustain it.
- The Airbus fleet, as I have many times mentioned, simply doesnt suit them, and theyre struggling to bring up the average CLF to above 80%.
- Their ATR's are old and simply cannot work the way that JU needs them to.
- I do believe JU is paying high lease rates for their leased Airbuses. I doubt that what was left of Jat gave confidence for comapnies to give favourable leases for aircraft to Air Serbia.
- JU has wasted alot of money into products that dont last. Pillows, blankets, equipment for inflight service (meal trays, bowls, cutlery etc), going as extreme as cabin interior (seats, curtains, carpet).
- I think that BEG has been a weak point for them, and there is ALOT of complaints visible online of missing/delayed luggage, damaged luggage as well as stolen items from customer checked in baggage. Not only does JU loose on money earnt through ticket sales, they loose customers both current and potential (ie word of mouth, recommendations and the tens if not hundreds of negative reviews regarding this particular problem).
- Back to the fleet issue, JU simply cannot make the frequencies needed to properly make their transfer operations work. The massive jump in capacity from ATR to A319 has meant that JU simply loses out to its competitors.
- JU's employee count in very high for an operation of its size.
- JU fails to recognise markets or is hampered by EY insisting that certain markets in funneled theough AUH. As an example, the Balkans (BiH in particular) is very popular in the Gulf region, yet JU have just closed up its only route to the region - Abu Dhabi, a destination that took a couple of years to build up.
- Poor marketing means that alot of people
are unaware of JU in the destinations it flies to. IST was dropped while JU is faving competirion from 2 Israeli airline companies.
- JU could do more in making purchasing tickets alot easier. Improving the Elevate Play app to allow Online Check In and purchasing tickets would help, while improving and expanding staff travel would do well to get some form of revenue for empty seats.
In agree with you. Etihad didn't do its homework of the Serbian market before it set up Air Serbia. Should have been a completely different strategy from the start.
DeleteMant things were not done right, but that is in the past. BTW, with GoS guarantee, JU could have gotten better lease rates. Particulalry on A332.
DeleteI can see how IKA would be a great route if it weren't for EY.
All Gulf carriers are basing their strategy on transfer traffic due to their superb location between continents, and this guy is talking about p2p. What is it that am I not understanding here?
ReplyDeleteThat they have no clue whatsoever what they are doing.
Delete