Skift Take

A nontraditional equity alliance strategy seems to be paying off for this Gulf carrier.

Etihad Airways, the third-biggest Gulf carrier, said stakes in Air Berlin Plc and Virgin Australia Holdings Ltd. helped lift second-quarter sales to a record $1.33 billion even as competition squeezed fares in its own markets.

Three-month revenue rose 7 percent, with the contribution from code-share and equity alliance partners jumping 25 percent to $184 million, accounting for one-fifth of total passenger sales, the Abu Dhabi-based company said today in a statement.

The biggest outside contribution came from Air Berlin, in which Etihad owns a 29 percent stake as part of a plan that’s also seen it take holdings in Virgin Australia, Aer Lingus Group Plc and Aer Seychelles Ltd. Conditions in key long-haul markets remain tough amid sluggish European growth and capacity hikes at larger rivals including Emirates and Qatar Airways Ltd.

The revenue gain was achieved “despite the continuation of unsteady economic and geopolitical factors, with air-fare yields slightly lower for the quarter, compressed by strong competitive capacity growth and resultant price competition,” Chief Executive Officer James Hogan said in the statement.

Etihad’s network of equity partners, unusual among modern airlines as major carriers focus more on global alliances and joint ventures, is likely to be expanded after it last month signed a plan to invest in Serbia’s JAT Airways and as it awaits regulatory approval to buy 24 percent of India’s Jet Airways.

Clearance has already been secured in Australia to lift the 10 percent Virgin Australia holding to 19.9 percent.

Etihad’s load factor — a measure of seat occupancy — slipped 0.3 points in the quarter to 77.3 percent, while the amount of cargo flown gained 26 percent to almost 113,000 tons.

Editors: Chris Jasper and Benedikt Kammel.

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Tags: earnings, etihad

Photo Credit: An Etihad Airways plane on the runway. Aero Icarus / Flickr