REPORT: Emirates and Etihad Considering Merger

Energy prices are down, meaning that travel to the Gulf region is down. At the same time, there’s less of an appetite to absorb losses.

We’ve seen Etihad decide that their CEO needed to step down amidst mounting problems in European airline investments especially (airberlin and Alitalia). We’ve also seen layoffs at the airline.

Meanwhile Emirates has apparently slowed its hiring and made some service cuts.

The region is now also starting to see increased competition from ultra low cost carriers. The CEO of Lufthansa, in announcing an enhanced partnership with Etihad, noted he sees “more rationalization among the Gulf Airlines” coming.

Amidst these challenges, there are reports out that the sheikhs who control these airlines are discussing a possible merger. (HT: David H.)

The ruling familes of the United Arab Emirates, which control the Emirates and Etihad airlines, have held talks about possibly merging the two airlines, Handelsblatt has learnt from several sources.

Whenever times are tough in the Gulf, there are rumors of Emirates and Etihad merging, for instance this Centre for Aviation report from 2008. And Tim Clark, CEO of Emirates, describes these new reports as “nonsense.”

And it’s difficult to see how two airlines with hubs a mere 75 minutes’ drive from each other can co-exist. Any merger would mean drawing down capacity at Abu Dhabi. It would mean the Al Nahyan family taking a buyout and scaling back ambitions for the capital of the UAE as global aviation hub.

Dubai, after all, is the stronger destination and home to Emirates. And Emirates is the more consistently profitable airline.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] REPORT: Emirates and Etihad Considering Merger – View from the Wing If this ever happened it could be very interesting given Emirates Tie up with Qantas and Etihad's part ownership of Virgin. What do you think are the chances of this and the effect on the Australian Aviation Industry? Reply With Quote […]

Comments

  1. Well Abu Dhabi family sorta already has a lot of stake in Emirates probably even majority stake but we’ll never know! Any merger and AUH will have to let go of its intention of being a hub.

  2. AUH is building a MASSIVE new airport terminal from the ground up, which would complicate any kind of merger if drawing down the EY-side is the answer.

  3. While EK is the more successful airline, all the money and power resides in Abu Dhabi, not Dubai

  4. Emirates isn’t just more profitable, it’s also way larger, and has a MAJOR leg up on EY in terms of brand recognition.

  5. Considering that most of the passangers on both airlines are transit passangers, couldn’t both hubs coexist (sharing flights from that future airline)? Wouldn’t be pretty much irrelevant for the majority of passagens to transit in Dubai or Abu Dhabi? Personally, I wouldn’t care.

  6. The gulf airlines exist for the prestige of the various emirates and their ruling dynasties. Profits come a poor second, much to the chagrin of certain American airlines, who are simply too lazy or incompetent to meaningfully compete. The powers behind the gulf airlines have not bought into the Western concept of mergers and rationalization, even if they are urged to do it by their imported CEOs etc. So don’t expect this recycled rumour to get legs!

  7. Put a high-speed shuttle between the two hubs, have one hub handle north and west areas, the other hub handle south and west flights….or something like that.

  8. @ Kimmea: I like it! A high speed rail linking the airports and cities. Problem solved! Maybe have a,high speed airside line!

  9. Agree with CoolHandLuke,
    The narcissism in the Gulf would not allow for either ruling family to loose face over giving up their respective airline.

  10. Was at DWC two weeks back the whole place is a major construction site literally in the middle of no were. But there wasn’t much to it at least as of now (maybe a handful of gates all empty and a duty free and McDonald’s) I heard emirates is planning to move everything there someday but I don’t understand how that is possible unless a gigantic chunk is being built and out of view. Doesn’t cut the transfer time too much though. 1 hr 15 mins from DXB to AUH and 50 mins from DWC to AUH. On the bright side you get to skip the traffic for sure. With expo 2020 just around the corner DWC is going to get some priority for sure…

    Would be an interesting merger if they took the best of both airlines normally though in these cost cutting measures you end up with the worst parts of each.

  11. The reality is Dubai doesn’t have any oil left and Abu Dhabi have a reserve for many more years.

  12. Just cashed in my remaining EY miles for a flight on Brussels Airlines from Brussels to Africa. Wow those redemptions sure are valuable, they must be losing tons of money on these. 25k miles gets you literally squat in North America, but lands you an expensive ticket on Brussels Airlines from Europe to East Africa.

  13. That would be like Nordstroms merging with K-Mart. I’m not sure if there is such a thing as stench memory, but everytime Etihad is mentioned I get stench sick

  14. Unless you are a UAE political guru, it is impossible to know whether this rumor is true. I suspect it is not, unless the Abu Dhabi sheikhs have already decided that Etihad’s losses — which will be perpetual — are too great to endure. These “airlines” — which are not airlines as the rest of the world understands the term — will all eventually have to downsize, as every heavily subsidized enterprise ultimately fails. While their losses are no doubt mounting here, logic would suggest that it will take a bigger shock than the current situation for the sheikhs to get serious about fixing the aviation insanity which they have created.

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