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Aug 29, 2017

Etihad pursues a path more conventional after investment calamities

Etihad's investment strategy implosion is starting to cause major ripples around the world

Will Air Berlin and its A320s like this one, land a deal with low cost megabrand Ryanair?

As it looks to a new future after disastrous investments in Euro basket case airlines Air Berlin and Alitalia, UAE carrier Etihad signaled ‘normalcy’ in its ambitions this week by doing a new code sharing deal with Aerolineas Argentinas.

However it is the consequences of the Abu Dhabi based airlines refusing to further participate in the chronic failure culture of Germany’s second largest airline that are transfixing every other significant player in the intra-European markets.

Will Air Berlin fall under the control of the EU’s largest regional airline Ryanair, or into the hands of the benevolent monolith that is Germany’s biggest airline, Lufthansa?

That contest for Air Berlin, and the possibility of its contributing a sudden addition of 118 jets to the Ryanair low cost carrier brand is seemingly moving toward a rapid resolution, as outlined in this reprint of a Bloomberg report.

The urgency is being driven by the German government, which has kept Air Berlin flying, after it recently declared it was insolvent, with around a quarter of a billion Australian dollars in a temporary loan that the carrier should have little trouble in blowing in a very short period of time given its record for inspired financial management.

The Australian interest in what Etihad hath wrought is of course its success in growing its own version of Emirates, that other UAE airline, in serving this market via a Middle East hub, and a one fifth ownership of Virgin Australia Holdings.

Not that any comparison of the VAH investment with what happened with Air Berlin or Alitalia would be in any way appropriate.

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One thought on “Etihad pursues a path more conventional after investment calamities

  1. endeavour.paul@gmail.com

    I have always seen the Etihad shareholding as the thorn in the side of Virgin Australia.
    Air New Zealand and Singapore Airlines might have been able to steer VA in a healthy direction but the friendship of James Hogan and John Borghetti meant that the Etihad shareholding was a security blanket for Borghetti to do what he wanted regardless of SIA and ANZ.
    The result was Air New Zealand walking away with the Chinese taking up the void. In the space of one year, the Chinese investment has halved in value.
    It will be interesting to see what Singapore does when Etihad finally walks from VA.