Travel Video Trends This Week: The Rise of Vertical Video and Our Fascination with Drones Sponsored This content is created collaboratively with one of our sponsors.
The airline’s 48% income jump suggests that its quasi-alliance is working and that it’s set to grow. The airline’s new aviation group is its first step towards formalizing its partnerships into an even more official network.
Etihad Airways PJSC reported surging annual profit as code-shares and equity stakes spurred sales and said it’s moving forward with plans to deepen ties to ally Air France-KLM Group and investment prospect Alitalia SpA.
Net income jumped 48 percent to $62 million, aided by revenue of $820 million from partnerships that equaled one-fifth of the $6.1 billion total as Etihad funneled traffic via its Abu Dhabi-based hub, the third-biggest Gulf carrier said today.
Etihad is in the process of rolling out a second batch of code-share accords with Air France that extends the pact to global locations and will add a revenue-sharing element where antitrust rights allow, Chief Executive Officer James Hogan said in a phone interview. A decision on taking a stake in Rome-based Alitalia may come this month, adding to deals on minority holdings in carriers including Air Berlin Plc, Virgin Australia Holdings Ltd. and Jet Airways (India) Ltd., Hogan said.
“Germany and Australia have been the two key pillars but we expect India, with our relationship with Jet Airways, to be very powerful this year,” Hogan said. Due diligence continues on Alitalia as Etihad “works through the process,” he said.
Deeper cooperation with Air France will give Etihad more access to markets in South America, as well as Europe, where the Paris-based company is the No. 1 airline by passenger traffic, the CEO said. Air France will gain links in the Middle East, Australasia, Southeast Asia and — in future — India, he said.
Buying a stake in Alitalia would bring exposure to one of Europe’s top air-travel markets while providing the Italian company with vital funding. Air France-KLM, previously Alitalia’s biggest shareholder, declined to support a capital increase last year after losses at its partner ballooned and a turnaround effort failed to bear fruit.
Hogan said he’s reviewing Alitalia’s business model and that Italy’s status as Europe’s third-largest outbound market makes the carrier attractive, together with opportunities for network enhancement in southern Europe that would complement the Air Berlin relationship in the north.
“We have not committed in any form to investing or not,” he added. “It’s not a race. Part of coming to a point of view in the next couple of weeks is we have to determine what we believe is appropriate to their shareholders and what we’re able to do under European law.”
Alitalia would give Etihad an eighth minority investment, making it unique among global carriers which favor full takeovers or arms-length relationships via global alliances.
The carrier also code-shares with 47 airlines, creating what it calls a “virtual network” of almost 400 destinations.
Hogan said the company still has no interest in joining such a group, including the Air France-led SkyTeam, and will continue to work on building its investments and broadening revenue sources by adding diverse travel interests.
That’s prompted the consolidation of operations under a new structure, Etihad Aviation Group, which will include the main airline business, an airport management unit and the newly formed Hala travel and tourism operation, the company said.
Etihad plans to raise $1.6 billion in aircraft financing this year, Chief Financial Officer James Rigney said.
Editors: Christopher Jasper and Benedikt Kammel.
To contact the reporter on this story: Deena Kamel Yousef in Dubai at email@example.com. To contact the editor responsible for this story: Benedikt Kammel at firstname.lastname@example.org.