Etihad to 'strengthen' ties with Aer Lingus

ETIHAD AIRWAYS’s decision to buy a 2.96 per cent stake in Aer Lingus in April was a signal to its board and management that it liked the airline’s strategy and wanted to forge a close business relationship, its president and chief executive James Hogan has said.

“By investing in Aer Lingus we’ve sent a very clear message to the board and to the Aer Lingus management that we think they’ve done a good job and we’d like to strengthen our relationship with them,” Mr Hogan told The Irish Times yesterday after Etihad published its half-year results.

“Ireland is an important market to us. It’s a strong market. It’s a profitable market. We have a strategy of equity [stakes] and code share.”

Mr Hogan would not comment directly on Ryanair’s recent €1.30-a-share offer for Aer Lingus. However, he indicated that he would prefer Aer Lingus to remain out of Ryanair’s control.

“We are a small shareholder, not a major shareholder. As a shareholder we watch it with interest but by investing in Aer Lingus we want to develop a strong relationship with the current management.

“We endorse their strategy and we would like to strengthen our relationship with the current management.”

Under EU rules, Abu Dhabi-based Etihad cannot own a majority stake in a member state airline.

However, it has expressed an interest in the State’s 25 per cent holding in Aer Lingus, which is slated to be sold.

“That’s in the hands of the Government. If there’s any tenders in the marketplace we would review it at that time . . . but the Government hasn’t gone to the market with any note with regard to the 25 per cent being offered.”

Etihad and Aer Lingus are currently in talks on the precise structure of their partnership.

This is believed to focus initially on the inter-lining of passengers between the airlines, probably followed by code sharing.

“We’re in a dialogue with Aer Lingus on how we move the relationship forward,” Mr Hogan said.

Etihad increased its revenues by 30 per cent year-on-year in the first six months of 2011 to $2.2 billion. Its passenger numbers rose to 4.89 million from 3.76 million in the same period.

Mr Hogan said passenger numbers were ahead of expectations. “We made a profit of $14 million last year and we certainly intend to do better than that this year.”

The Australian said its direct Dublin to Abu Dhabi route performed “strongly” in the first half in spite of the economic downturn.

“Obviously there’s been pressure on the yield [fares] with the arrival of our near neighbour [Emirates launched Dublin-Dubai in January] but our seat factor continues to stay at the same level.”

Etihad also has strategic stakes in Air Berlin, Air Seychelles and Virgin Australia and Mr Hogan said it has helped the German airline achieve “in excess of €100 million” in cost savings.

“We’ve put over 60,000 reservations into their system, they’ve put considerable traffic into our system. As a partnership, it’s certainly exceeding our expectations,” he said.