Etihad boss calls for stronger aviation industry

Etihad’s top dog has warned against the insular attitudes in the aviation industry, instead advocating for support and investment.

“Aviation is a global industry, not a local one,” the airline’s president and ceo James Hogan said.

Hogan was speaking at the Rimini Roundtable Discussion in Italy, related to last year’s investment by Etihad Airways in Alitalia to revitalise the national airline and set it on a new course towards sustainable profitability.

“Like so many other industries, aviation should have access to global investment funds in order to provide the capital required to grow efficiently and remain competitive,” he added.

“Global investment is not a threat. It is both a lifeline and an energiser, which can only be good for European aviation, European economies and European jobs.”

Etihad Airways invested 560 million euros in a multi-level deal comprising a 49% equity stake in Alitalia, a 75% stake in Alitalia’s loyalty program, MilleMiglia, the purchase from and leaseback to Alitalia of five pairs of arrival and departure slots at London Heathrow Airport, and shareholder loans to reduce Alitalia’s immediate financial liabilities.

Etihad’s commitment was the largest part of a broader investment with other stakeholders, which totalled 860 million euros.

Hogan said the Etihad investment in Alitalia was a cost-effective way for both airlines to progress, while delivering more choice and better quality to consumers, something he continues to highlight as integral to the industry.

“Let’s not forget that nobody else wanted to invest in Alitalia,” Hogan said.

“But we see a great future for Alitalia, and we are committed to working with other shareholders, and with the airline, to help rebuild it as a premium brand and a profitable business.

“A strong Alitalia is essential for Italy. Without Alitalia, air connectivity to, from and within Italy would be seriously diminished and left to others without the same commitment to Italy or Italians.”

Etihad Airways helped expand Alitalia’s global reach by connecting the networks of both airlines via Etihad’s hub and home base in Abu Dhabi, with each carrier entering into codeshare agreements on each other’s services. Etihad also assisted Alitalia in sourcing new wide-body aircraft to increase long-haul services.

In this first year, the aim is to reduce losses, with break-even targeted in 2016 and profitability in 2017.

“We are not a bank,” Hogan said. “We needed to stabilise the business financially by providing fresh capital.

“We also needed to work with Alitalia, its unions and its partners to identify immediate opportunities to cut costs. These included seeking efficiencies, restructuring the network and schedules, and reducing the short-haul fleet to maximise aircraft utilisation. There were immediate results.

“We have not only ensured that Alitalia stays in the air. We have also invested in protecting and creating jobs in Italy.

“We have invested in rebuilding the Alitalia brand. And we have invested in Alitalia with the clear commitment that we will help it to grow into a prestige global brand, and an airline and company which contributes to Italy.”

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alitalia etihad airways italy james hogan