In a pandemic or out of a pandemic, Etihad cannot make money. While it plans to downsize its way to growth, perhaps the wiser move is finally convincing Emirates to merge. But I increasingly view a merger as unlikely.
Etihad Reports Major Loss In 2020
Etihad just reported a massive loss for 2020 totaling $1.7 billion. Revenue dropped from $5.6 billion in 2019 to $2.7 billion in 2020, as the pandemic severely depressed demand for air travel. But it’s not like the pandemic is fully to blame. Since 2016, Etihad has lost $7.3 billion. In 2017 it also lost nearly the same amount while most carriers profited.
One big problem stemmed from Etihad’s investment in airlines around the world, none of which worked out well. But even its own brand was not profitable.
To address the continued losses, Etihad slashed routes, reduced salaries, laid off workers, cancelled aircraft orders, and sold existing aircraft.
But is emerging from the pandemic as a much smaller airline the path forward?
The Difficult Question Of An Etihad – Emirates Merger
Prestige counts for something. The ongoing competition between Abu Dhabi and Dubai cannot be dismissed. Abu Dhabi residents also don’t want to drive to Dubai International Airport (or even Dubai World Central) or fly WizzAir.
Emirates has repeatedly said there will be no merger. Truly, Emirates would rather see Etihad just go away (and that may be the long-term game plan). But what does Etihad hope to accomplish?
On paper, Etihad planned for a complete turnaround and profitably by 2023. The pandemic likely will push that goal by at least two years.
Its latest “transformation plan” is high on fluff and light on details. Etihad currently has a fleet of 103 aircraft, including 39 Boeing 787 Dreamliners. It also notes that “Etihad is continuing to gradually resume services and grow its global network as international borders reopen.”
I used to be a big proponent of merger (see below). Part of me still thinks that a merger is inevitable because the overlap between Emirates and Etihad is simply unnecessary, especially with current demand.
But increasingly I think that Etihad is determined to go it alone. Certainly, prestige and convenience for Abu Dhabi residents play into this calculus. But I also sense a determination to make it work that goes beyond pride. The innovations at Abu Dhabi International Airport and investment in the onboard product suggest not only that Emirates doesn’t want to merge, but Etihad doesn’t either.
CONCLUSION
Etihad continues to lose money, but believes it is on the right track. While a merger seemed likely in 2020 and is still logical, I no longer see it happening.
> Read More: Etihad, Can You Just Merge With Emirates Already?
image: Etihad
My high dollar MBAvast experience regarding M&A say this article is way off. But hey slow news day
You think they will merge?
Opinion asked yesterday. Opinion supplied today.
One small point: the losses since 2016 now total $7.3 billion (“Since 2016, Etihad has lost $5.6 billion.”).
It’s less important what either airline wants to do and more important how the UAE government decides to manage this. I have flown Emirates and been to Dubai. I have yet to fly Etihad and visit Abu Dhabi — for some reason those feel like two different experiences, and I hope they remain such.
Don’t forget, the majority of the UAE’s oil money is in Abu Dhabi…they not only bailed out Emirates before, but also Dubai itself. Burj Khalifa was originally to be called Burj Dubai but the name was changed as a condition of the bail out back in 2010.
I doubt EK is interested in a merger.
What’s the point of duplicate routes out of AUH if they already have a massive and efficient mega hub at DBX?
I’m sure they would rather see Etihad eat itself and disappear.
Well since they’re not going to fly the A380 again, it seems to me that there’s a stronger chance they’ll just go away. Why would anyone pay for Etihad J (currently no F except for one route I think) when you can fly Q-suites? Not sure Etihad F is all that great outside of the Apartments compared to other airlines (Emirates, for example).