Etihad’s Hogan to step down as losses mount in minority investments

After 10 years at the helm of Etihad, president and CEO James Hogan will step down during the second half of 2017. Hogan has overseen the growth of Etihad from a 22-plane regional carrier into a 120-aircraft global airline, with seven airline equity partnerships that serve more than 120 million passengers per year. In recent years, however, the Gulf carrier has struggled under these investments as low oil prices reduced demand for premium travel.

Nevertheless, Hogan commented that, “along with the board and my 26,000 colleagues, I am very proud of what we have built together at Etihad and of the company’s substantial contribution to the UAE and to the development of Abu Dhabi.”

Hogan led an investment strategy based on taking minority shares in carriers that would divert passengers onto Etihad flights, and route them through the carriers Abu Dhabi hub. The strategy paid off in terms of increasing passenger count and cargo carried. The airline’s code-share and equity partnerships remain a core element of its growth, delivering 5.5 million passengers onto Etihad Airways’ flights in 2016. Etihad’s core airline operations currently serve 18.5 million guests, reaching 112 destinations.

But stakes in airlines such as Alitalia and Air Berlin mired the carrier in cash-losing operations that it had little authority to control due to its minority-ownership status, which were required under E.U. regulations. Two years after purchasing a 49 percent stake in Alitalia, for instance, the carrier is now losing more than half a million euros a day, and analysts expect that trend to continue for another two to three years. Air Berlin, in which Etihad has a 29.9 percent stake, is in similar dire circumstances.

Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei told the press that the company was working to continue success in a challenging market. “The Board and management team will continue an ongoing, company-wide strategic review. We must ensure that the airline is the right size and the right shape,” he said.

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