Airline industry set for more consolidation, Etihad chief says


The world’s airline industry is heading for more consolidation because of the global recession and drop in air travel, according to the chief executive officer of Etihad Airways, the United Arab Emirates’ state-owned airline.

Combinations such as Air France-KLM Group, Europe’s biggest airline, will probably become more common as companies seek to cut costs, James Hogan said today on Australian Broadcasting Corp.’s Inside Business program. Etihad, based in Abu Dhabi, will seek ways to work more closely with Qantas Airways Ltd., Australia’s largest carrier, he said.

Losses by the global airline industry may total $4.7 billion this year, almost 90 percent higher than previously forecast, the International Air Transport Association said March 24. Air France said March 27 it will have a loss for the year ending March 31, while British Airways Plc, Europe’s third-largest carrier, is forecasting an operating loss of about 150 million pounds ($215 million) for the same period.

“We are already seeing a number of airlines under huge pressure,” Hogan said on the program. “Airlines will have to make decisions as any other business does with regard to their network, their fleet and whether they rationalize, consolidate or continue to invest in expansion.”

Etihad itself is forecasting a 15 percent increase in passenger numbers this year to 7 million as it expands its network to 55 destinations from 50 and adds aircraft, the airline said March 18. The airline is taking market share from the Asian and European hubs, while business within the Gulf region is “still strong,” Hogan said.

Etihad, which starts daily flights from Abu Dhabi to Melbourne today, will still be “under pressure” to achieve its target of becoming profitable in 2010, Hogan said.

“Let’s see how the second half of this year goes,” he said.

Sydney-based Qantas announced a codeshare arrangement with Etihad earlier this month for four Middle East destinations.