The 60-year-old Australian will leave in the second half as Etihad reviews its own operations and the future direction of Hogan’s so-called equity alliance, which has seen the Gulf carrier take minority stakes in a variety of smaller and often ailing airlines across Europe and the Asia-Pacific.
“We must ensure that the airline is the right size and the right shape,” Etihad Aviation Group Chairman Mohamed Mubarak Fadhel Al Mazrouei said in a statement Tuesday. “We must progress and adjust our airline equity partnerships even as we remain committed to the strategy.”
Chief Financial Officer James Rigney will also quit to join Hogan at an investment company located outside the United Arab Emirates and not affiliated to Etihad. A global search for a new CEO and CFO is underway, according to the company.
Hogan took the helm at Etihad in 2006 before transitioning to group CEO last year. He has eschewed global airline alliances in favor of stakes in carriers including India’s Jet Airways and Virgin Australia in a bid to catch up with longer-established Gulf rivals Emirates of Dubai and Qatar Airways.
While most of those investments have begun to show a profit and helped to direct more traffic through Etihad’s Abu Dhabi hub, Air Berlin and Alitalia have continued to bleed cash, with their situation approaching a critical point in the past couple of months.
The German company, in which Etihad has a 29.9 percent stake, has suffered record losses in each of the past two years and will split into three to survive, with part of the fleet to operate on behalf of arch-rival Deutsche Lufthansa AG and other aircraft transferring to a venture with tour operator TUI AG.
Rome-based Alitalia, the Italian flag carrier 49 percent owned by Etihad, has failed to stem losses after a series of restructuring efforts and is now facing another overhaul that could include thousands of job cuts. Etihad’s bid revive the two airlines has been constrained by European Union rules that cap outside ownership at less than 50 percent, limiting its degree of management control.
Like other Gulf operators, Etihad has also struggled in the past year as the lower oil price clips demand for premium travel in the Middle East and stuttering European economies and a spate of terror attacks hurt mass-market demand. Al Mazrouei said in his statement that the company continues to face a “challenging market.”
The carrier may also encounter a tougher time expanding in North America as President Donald Trump takes office vowing to protect American jobs. Delta Air Lines Inc., American Airlines Group Inc. and United Continental Holdings Inc. have previously urged the federal government to review an open-skies treaty with the UAE and Qatar, alleging that their Gulf rivals have unfairly benefited from state aid.
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This article was written by Deena Kamel Yousef from Bloomberg and was legally licensed through the NewsCred publisher network.