Emirates, Etihad looking at closer

Dubai’s Emirates and Abu Dhabi’s Etihad Airways are looking at ways they can work closer together behind the scenes on supply chain synergies, as the leaders of the UAE’s two biggest airlines enjoy an increasingly close relationship, Emirates president Tim Clark told reporters this week.

“I think, to be quite honest, we have had a closer working relationship with Etihad than we’ve ever had. [Etihad Airways CEO] Tony Douglas and I often have in-depth conversations about what we can do behind the scenes,” Clark said on the sidelines of the AVSEC Global 2019 conference in Dubai.

“Obviously, Etihad has to remain and Emirates has to remain, but where we share back of house staff there’s actually no reason why we shouldn’t share it, as long as we do not enter into competition law and all the other bits and pieces, in the markets we serve, which we don’t, of course.

“But whether, you know, you’re looking at engine overhaul shops or you’re looking at supply chain synergies or, I don’t know, bits and pieces, there’s lots of things that we can do together. I think, my view is that, certainly, from my principles, that’s something that we’d like to see. We’re trying to do it,” he added.

Clark was one of the founding executives at Emirates in 1985 and Douglas joined Etihad Airways in January 2018, replacing James Hogan.

Bloomberg reported last September that Emirates was looking at taking over Etihad Airways, citing four unnamed sources. While the move would create the world’s biggest carrier by passenger traffic, both airlines swiftly denied the report and, in an interview with Arabian Business in March Douglas dismissed the reports as the “laziest piece of Thursday afternoon journalism”.

In March, the Abu Dhabi airline reported it had trimmed its losses from previous highs, amid lower costs and revenues, but higher margins. The national carrier’s third billion dollar loss in as many years, $1.28 billion, is 15.4 percent lower than losses reported in 2017. While total losses now amount to $4.67 billion over three years, results from 2018 suggest that the airline has lowered losses by around a third.

Better results

Emirates is also forecasting better results when it releases its financial results for the first half of 2019 in October. “I’m content that it is better than we thought it would be, given that we had to shut the airport, one of the runways, for seven weeks and it’s also better than last year,” Clark said.

Last year, Emirates reported a 86 percent year-on-year drop in net profit during the first half of the 2018-19 financial year, despite a 10 percent rise in revenues to AED48.9 billion ($13.3 billion).

Closer links between the Dubai and Abu Dhabi airlines has been something Clark has alluded to in the past. “I think there is value to be had working more closely with them,” he was quoted as saying by Reuters in 2017. “There are many areas that the airlines could work together on like procurement. But we have to go the first jump first to understand what it is we could do and I‘m simply the manager of one of the businesses… It is my superiors who have to make that call, not me.”

At the same time, Dubai Airports CEO Paul Griffiths has said he was open to the possibility of direct links with the major airports in Abu Dhabi. “I think the discussions are at a very preliminary stage and I don’t think there is any plan worked out,” Griffiths told Zawya in an interview on the sidelines of a press event to launch the 2017 Dubai Airshow.

“I just think that, as with everything in business generally, one has to keep an open mind as to what the possibilities are for the future. Once those conversations start to mature we will see the shape of what comes out,” he said, adding that the idea was not currently part of the company’s business plan.

“It is not something that we have considered in any great detail, but that doesn’t mean to say that we would close our minds to the possibility of something happening in the future,” he added.

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