Etihad looks to lead equity tie-up trend
Etihad Airways (EY) is pursuing in-house alliances with pooled resources to push down unit costs, according to CEO James Hogan.
Speaking at World Routes 2012 in Abu Dhabi, Hogan said, “Consolidation and equity partnerships, most likely led by us, are coming onto the horizon. These are tough times but aviation is a long game. Airline CEOs must have the structure to weather the cycles and certainly, as Etihad, we have the structure.”
Over the last few years, EY has surged forward with its partnership strategy, striking a raft of codeshare deals and forming high-profile equity tie-ups including Air Berlin and Virgin Australia (ATW Daily News, July 5).
“We have to stretch our network for the customer,” he said. “To be able to keep someone within your network, we believe, is fundamental. It’s about customer benefits, generating more passengers and more revenue.”
EY launched operations in 2003 with a clear mandate for rapid growth. This year, its turnover will exceed $5 billion, up from $4.1 billion in 2011, delivering a $14 million net profit. Next year EY’s revenues are set to grow to $6.5 billion. “We had to ramp up quickly to be competitive and have the scale to win,” Hogan said.
Hogan is now leveraging EY’s equity partnerships to deliver more traffic, share back office functions and create strong joint purchasing power.
“The days of airlines having their own maintenance, pilot training and revenue management departments are over. It’s about working smarter to deliver better unit costs. With our equity partners, we have done deals on inflight entertainment, seats and engines which they couldn’t achieve in their own right. They have benefitted and, by increasing our scale, they helped us too.”
Hogan is still on the lookout for acquisition targets “at the right price,” but said the EY equity model is not about control. “It is about cementing partnerships, having a clear focus on being efficient, being committed to developing a centre of excellence and growing revenues.”
http://atwonline.com/airline-finance-data/news/etihad-looks-lead-equity-tie-trend-1002
Etihad Airways (EY) is pursuing in-house alliances with pooled resources to push down unit costs, according to CEO James Hogan.
Speaking at World Routes 2012 in Abu Dhabi, Hogan said, “Consolidation and equity partnerships, most likely led by us, are coming onto the horizon. These are tough times but aviation is a long game. Airline CEOs must have the structure to weather the cycles and certainly, as Etihad, we have the structure.”
Over the last few years, EY has surged forward with its partnership strategy, striking a raft of codeshare deals and forming high-profile equity tie-ups including Air Berlin and Virgin Australia (ATW Daily News, July 5).
“We have to stretch our network for the customer,” he said. “To be able to keep someone within your network, we believe, is fundamental. It’s about customer benefits, generating more passengers and more revenue.”
EY launched operations in 2003 with a clear mandate for rapid growth. This year, its turnover will exceed $5 billion, up from $4.1 billion in 2011, delivering a $14 million net profit. Next year EY’s revenues are set to grow to $6.5 billion. “We had to ramp up quickly to be competitive and have the scale to win,” Hogan said.
Hogan is now leveraging EY’s equity partnerships to deliver more traffic, share back office functions and create strong joint purchasing power.
“The days of airlines having their own maintenance, pilot training and revenue management departments are over. It’s about working smarter to deliver better unit costs. With our equity partners, we have done deals on inflight entertainment, seats and engines which they couldn’t achieve in their own right. They have benefitted and, by increasing our scale, they helped us too.”
Hogan is still on the lookout for acquisition targets “at the right price,” but said the EY equity model is not about control. “It is about cementing partnerships, having a clear focus on being efficient, being committed to developing a centre of excellence and growing revenues.”
http://atwonline.com/airline-finance-data/news/etihad-looks-lead-equity-tie-trend-1002
