The dismantling of Etihad’s network of minority stakes in other airlines has begun with the sale of Swiss regional carrier Darwin Airline to a new subsidiary of Slovenia’s Adria Airways.
The development again raises the as yet unanswerable question as to the fate of Etihad’s one fifth stake in Virgin Australia.
Etihad expanded rapidly in scope by a policy of purchasing minority stakes in a diverse range of carriers under the management lead by the now ousted CEO, James Hogan. The Abu Dhabi based carrier which had set out to emulate the success of neighboring Dubai based giant, Emirates, had taken a one third stake in Darwin.
However it was massively unsuccessful and costly investments in airBerlin and Italian carrier, Alitalia, which would have cost Etihad’s sovereign owners more than $AU 1 billion at prevailing exchange rates, which destroyed the Hogan strategy.
AirBerlin was outclassed by Germany’s major airline Lufthansa, wherever they competed with each other, and Alitalia, without putting too fine a point on it, was trashed by militant union resistance to restructuring, which saw Etihad refuse to commit more money to its operations. The fates of airBerlin and Alitalia, are unknown.
The final reckoning when it comes to those Etihad investments, which are assumed to be likely to be written off or sold for less than cost, has yet to be made. Etihad under previous management had professed continued support for its largely profitless involvement in Virgin Australia, and has continued to grow its apparent success in the Australian international air travel market under the post Hogan management (which is still taking shape.)