Middle East carrier Etihad Airways has increased its stake in German carrier airberlin to 29.21 per cent becoming the biggest individual shareholder in the carrier in the process. The new ‘strategic partnership’ between the two carriers will lead to airberlin relocating its Middle East operations from Dubai International to Abu Dhabi International from January 2012 and will open new opportunities for both entities moving forward.
The deal is a major fillip for airberlin, which will soon become a full member of the oneworld global airline alliance. The carrier has been undergoing a major internal restructuring after reporting a €134.3 million loss for the first three months of 2011. Under the terms of the agreement Etihad is also providing a five-year $255 million financial offering which will enable airberlin to purchase new aircraft and promote future network growth in regional and intercontinental markets.
Alongside its own route growth Etihad Airways has expanded its network through partnerships with international carriers, but its Chief Executive Officer, James Hogan, said this latest deal with airberlin was one of the most important in its history.
“This new partnership expands our network reach, gives us access to 33 million new passengers, and provides us with a real opportunity for global growth. Through airberlin, we gain immediate access to a broad and complementary European market, with outstanding connectivity options for customers of both airlines,” he said.
“Our partnership strategy has been integral to our success over the past eight years, and the returns we have seen from this strategy have confirmed its value. Partnerships are a smart way to enhance our ability to compete on the world stage and we now have a portfolio of 34 quality airline partners, but this is our first equity investment in another airline,” he added.
Together Etihad Airways and airberlin have a combined network of 239 destinations across 77 countries and the transfer of airberlin’s existing operations from Dubai to Abu Dhabi will help link these together. The German carrier launched flights between Berlin Tegel and Dubai International in November 2010 and currently offers four flights per week on the route. Following this week’s announcement the carrier has closed reservations on this route from January 15, 2012. A revised operation to Abu Dhabi has not yet been uploaded to the GDS but this willcome into force from that date.
“The strategic partnership with Etihad Airways opens up enormous opportunities for the future of our company,” said Hartmut Mehdorn, Chief Executive Officer, airberlin. “This applies especially to future market development and the realisation of synergies.”
“One of the key components of the new partnership is the launch of airberlin services to Abu Dhabi, which will become our new gateway to Asia and Australia. The agreement with Etihad Airways will also dramatically improve the global connectivity of our customers in Germany, Switzerland, Austria, and throughout the GCC and Middle East,” he added.
The two airlines expect to unlock a range of efficiencies through their synergies and estimate each could achieve incremental revenues of between EUR 35 million and EUR 40 million in the first year of their partnership alone. Etihad Airways will get two seats on the airberlin Board of Directors and will work closely with the German carrier to create a joint procurement taskforce to look for cost efficiencies across the two companies, including areas such as fleet procurement and deployment, maintenance, repair and overhaul (MRO) and general procurement. They also plan to seek anti-trust immunity, which would allow the greater co-ordination of route networks and of sales and marketing activities.
The two airlines will also implement an extensive codeshare agreement with Etihad codesharing on 36 of airberlin’s 171 destinations and its European partner codesharing on 24 of its own 82 passenger destinations. This is just the first stage of this arrangement and it will be expanded to include further routes in the future including the activities of airberlin’s partner carriers including NIKI in Austria and Belair in Switzerland.
airberlin has had a difficult 2011 as the aviation tax in Germany and the difficult economic climate hit its traffic considerably. It is working to save around €200 million through its ‘Shape & Size’ efficiency improvement programme, which will see its capacity reduced as aircraft are retired and new aircraft deliveries deferred, with growth not expected again until 2014.
It also revealed earlier this month that it will be closing its stations at Dortmund and Erfurt from November 1, 2012. The airline has had bases at these two locations since November 2000 and November 1999, respectively, offering non-stop flights to destinations throughout the Mediterranean region as well as numerous connections via the Nuremberg hub during the winter season. The carrier said the decision, part of the ‘Shape & Size’ programme will ultimately “increase efficiency” and has been designed to “improve utilisation of crew and maintenance resources”.
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