would like to see its European affiliate eventually included in the wide-ranging code-share agreement that Etihad is negotiating with - .
“If there is an opportunity, we would be keen to see [the inclusion of Air Berlin] happen,” Etihad CEO James Hogan told Aviation Week at the airline’s headquarters in Abu Dhabi. The code-share negotiations with Air France-KLM have been “very good and are continuing,” Hogan says.
Linking Air Berlin with Air France would not necessarily put the German carrier’s membership in the Oneworld alliance into question. However, it would shift the carrier’s network priorities to align even more with the broader Etihad strategy, and raise the question of how much additional value the alliance membership brings. “Oneworld is secondary,” Hogan says.
Etihad bought a 29% stake in Air Berlin late last year for $105 million, while also providing a $255 million loan to its new partner. The German carrier’s financial results have been deteriorating rapidly, but Hogan says he is convinced that the company will turn the corner. He predicts that Air Berlin will return to profitability “within the next 12-18 months.” He also stresses that “they won’t need another loan.”
The appointment of formerCEO Wolfgang Prock-Schauer as head of network and strategy at Air Berlin was an important move, notes Hogan. The network “needs to be refreshed” and Air Berlin executives “know they have to make tough decisions,” he says.
In spite of the company’s ongoing losses on short-haul flying, Hogan still sees the European network as core business. While Air Berlin’s long-haul product is being upgraded to match Etihad’s standards, Hogan says that is not the target for the European and domestic services.
Etihad announced a code-share deal with Saudi Arabia’s Nas Air on Oct. 1. The deal will give Nas Air better access to Saudi secondary cities and better connectivity from Asia to Saudi Arabia through the Abu Dhabi hub. Etihad decided not to buy a stake in Nas Air. “Our equity strategy is limited,” Hogan says. In addition to Air Berlin, Etihad holds stakes in Air Seychelles,and –mainly to provide feed at the ends of Etihad’s network.
Hogan says the carrier has no intention to fly North Atlantic routes from Europe, even though the bilateral air service agreement between Germany and the United Arab Emirates gives UAE carriers limited fifth-freedom rights to the U.S.
Etihad plans to take delivery of another four aircraft in 2012, which will give it a fleet of 71 aircraft by the end of this year. It will phase in another 14 aircraft in 2013, which will be a mixture ofand . The carrier is in the process of evaluating which options from previous orders will be exercised.
The airline’s first Airbusis set to arrive in the fourth quarter of 2014, along with its first . Hogan says the A380s will be flown in a three-class configuration, but the seat count remains confidential. The aircraft will initially be used on routes from Abu Dhabi to London, Sydney and New York.
Meanwhile, Etihad has reduced its order for the Airbus-1000 from the original 25 to 12 aircraft. Hogan says this decision was made several months ago because Airbus could not make guarantees on delivery times, and because some of the specifications had not been clarified. Etihad decided to reduce its order after Airbus re-launched the A350-1000 with more powerful engines and other design changes last year. The airline plans to deploy 787s on the routes that had been earmarked for the A350-1000.
Etihad has announced its first annual profit, of $14 million, for the 2011 fiscal year. Hogan says the company is on track to be profitable in 2012 “if we have a good fourth quarter.” Revenues are expected to grow to $4.9 billion in 2012 and to $6.5 billion in 2013. The airline plans to announce its third-quarter results within the next few days.