Etihad cuts back drastically on global ambitions amid huge financial losses
Abu Dhabi — Etihad Airways CEO Tony Douglas laid out plans to scale back the carrier’s global ambitions following almost $3.5bn in losses, saying more jobs may be cut and that jet orders are in doubt after a "whirlwind" six-month review since he took charge.
Douglas will take personal responsibility for the main airline business, moving incumbent Peter Baumgartner to the new position of special adviser, and confirmed that Etihad will focus more on serving Abu Dhabi, where it’s based, than carrying globe-trotting passengers between continents.
The CEO revealed in an interview that thousands of jobs have already gone as Etihad puts the brakes on a long-running and costly attempt to close the gap to larger Persian Gulf rivals Emirates and Qatar Airways. He’s also in negotiations with Airbus and Boeing after concluding that doubling the fleet is no longer viable, calling into question dozens of 100 wide-body orders.
"The eventual aim of this process is for Etihad to be in the best shape to ensure its long-term sustainability, enabling it to meet the challenges of an aviation industry in constant flux," he said.
Baumgartner will become senior strategic adviser to Douglas as part of the management overhaul, having run the main airline operation since May 2016, when the last major structural change at the carrier saw the creation of Etihad Aviation Group as an umbrella company.
The latest moves will see the business divided into seven divisions covering operations, commercial activities, maintenance, finance, human resources and support services, as well as transformation. That’s likely to lead to further job cuts, Douglas said.
The CEO said Etihad’s focus on Abu Dhabi will prioritise point-to-point flights over the super-hub model the carrier previously pursued as it sought to attract customers making flights between Asia, Europe, Africa and the Americas. Further routes are also likely to be abandoned though others may be opened, he said.
Etihad has already retreated from the so-called equity alliance strategy devised by former chief James Hogan, which saw it splurge cash on a clutch of struggling carriers, among which Air Berlin and Alitalia filed for insolvency last year.
Douglas, who was previously in charge of procurement at Britain’s defence ministry and before that ran Abu Dhabi and London Heathrow airports, added that the aim is to make Etihad "a re-invigorated innovator brand, with an optimised and profitable network".
Last month, Etihad posted a $1.52bn core airline loss for 2017, narrowing from $1.95bn a year earlier, when demand was hurt as the low price of crude weighed on oil-producing Gulf economies. Revenue improved 3.4% last year though passenger numbers were virtually static at 18.6-million.
With assistance from Giovanni Prati and Hussein Slim