Etihad Wants to Codeshare with Star Alliance, Restructures After Massive Losses

Jul 3, 2018

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After posting $1.5 billion in losses last year and $2 billion the year before that, Etihad is shaking things up, hoping to put itself back on track to profit.

The government of Abu Dhabi, which owns the airline, is restructuring the Etihad Aviation Group into seven different business divisions, the carrier announced today. Peter Baumgartner will step down as the airline’s CEO and will be replaced by Tony Douglas. Baumgartner will stay with Etihad, but will move into a strategic advisor role and work on developing new partnerships with other airlines.

The business divisions will be operations; commercial; maintenance, repair & overhaul (MRO); human resources; finance; support services; and transformation, all which will report to Douglas.

“We are now well equipped to deliver our plans as a reinvigorated brand, with an optimized and profitable network, technologically advanced fleet, and a strengthened position as the global airline of choice, run by a seasoned team of talented professionals,” Douglas said in a statement.

Douglas said that the Etihad Group is already seeing positive results even before this most recent restructuring.

“Etihad Group stays in place, however we have significantly flattened that structure, simplified the way it’s designed, so we get crisper accountability, are more agile, and take the cost out,” Douglas told The National on Tuesday.

The new CEO will attempt to stem losses after investments in Air Berlin and Alitalia didn’t turn out as expected. Air Berlin ceased to operate last fall and Alitalia is bankrupt, but propped up by the Italian government. In an effort to return to profitability, Etihad has ended or reduced service on some routes and lowered operating costs.

Douglas wants Etihad to form new codeshare partnerships with Star Alliance airlines, which is possible after the alliance announced it was ready to work with the carrier during last month’s International Air Transport Association conference.

“In the past, the Etihad Group was identified as being an alliance itself and, consequently, under the rules of Star Alliance, its members were not allowed to engage in collaboration with us on codeshares,” Douglas told Emirati newspaper The National. According to Douglas, “we’ve now been identified in their eyes as a more rational airline not just going for ‘growth for growth’s sake’ but looking for sustainable growth.”

That doesn’t mean Etihad is joining Star Alliance, but it will allow for greater cooperation between Star Alliance carriers like United and Lufthansa. So, no redeeming United or Aeroplan miles on the carrier for an Etihad first-class apartment (yet, at least).

Featured image by Alberto Riva / The Points Guy

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