Emirates and Etihad have recently denied being in discussions for the acquisition of the latter by the former. Move along, there’s nothing to see, no Emirates Etihad marriage in sight… The kind of denial that, precisely, puts a hot topic back on the table because there is a topic and it is not for nothing that this rumor systematically returns to the front of the stage.
We wrote last year and have not changed our position on this subject: the industry is consolidating and some players will not be able to survive on their own, while others will need external growth drivers.
Emirates does less well, Etihad does badly
In this picture, the two Gulf airlines are not in the same boat. While waiting for Emirates’ 2018 figures we remember deceptive 2017 figures. It had ended with a profit of $ 1.1 billion (+67% compared to the previous year), knowing that this year followed a catastrophic year 2016 where it had plunged by 82%.
In short, Emirates is getting back on track, continuing to invest heavily, but it seems that the golden age is over and that the Dubai-based airline should expect less “extraordinary” results in the future. Its 30th consecutive year of growth should not hide one reality: Emirates needs a second breath.
It’s a different story at Etihad. If the airline has reduced its losses in 2017 it continues to lose money and a very unfortunate alliance strategy that has cost it a lot of money is not helping.
Too many cooks in the kitchen in the Gulf
Add to that a local factor: there’s starting to be a traffic jam of ambitious people in the Gulf Sisters country. We already talked about Emirates and Etihad. Qatar also wants to exist even if the political context and its banishment from the Emirates has somewhat cut its wings.
But in the shadow of the 3 majors, others are growing and have not denied their ambitions. Oman Air and Saudia Airlines are modernizing their fleets (for both), are finally getting an airport worthy of the name (for the first) and do not see why they would not benefit like their big sisters from the central position of their hub between Europe and Asia.
Except that it’s starting to get a little too crowded on the same routes with the same value proposition, targeting the same customers. In this game, there are inevitably one or two players too many, and an ailing Etihad is the perfect target for Emirates, which is looking for new sources of growth.
– They are two Emirati airlines, simpler to bring together. The operation is politically more complicated with the others and especially with Qatar.
– The Qatar option discarded, Etihad the one that is doing the least well and is most looking for a partner to relieve its finances.
– Fleets that are similar in composition.
– Identical alliance strategies: none of them has joined a major alliance (Qatar is with One World, Saudia with Skyteam) and they are content with opportunistic partnerships. In short, a rapprochement would not create the need to unravel / re-ravel a tangle of incompatible partnerships.
So the question is not if it will happen, but when. And what would be the consequences of a marriage between Emirates and Etihad for the competition, but especially for the two airlines that are primarily concerned.