airberlin's bankruptcy should not have been a surprise if you'd seen Etihad's financial results. For the German carrier is the third in Europe that has had funding pulled by the Abu Dhabi-based carrier.
Under former CEO James Hogan, Etihad set out on creating its own 'alliance' where it acquired stakes in several airlines although never the majority. These included 49% in Air Serbia, 40% in Air Seychelles, 29.21% in airberlin, 49% in Alitalia, 33% in Darwin Airline, 24% in Jet Airways and 24.2% in Virgin Australia.
Hogan left in July and shortly after the carrier announced a net loss of US$1.87 billion for 2016, significantly down from its $103m profit in 2015. In a statement H.E. Mohamed Mubarak Fadhel Al Mazrouei, chairman of Etihad Aviation Group, said: "The Board and executive team have been working since last year to address the issues and challenges through a comprehensive strategic review aimed at driving improved performance across the group, which includes a full review of our airline equity partnership strategy."
That review had already kicked in with Etihad selling its stake in Darwin Airline to Slovenian carrier Adria Airways. This will be rebranded and operate as a subsidiary under Adria Airways Switzerland. Darwin appears stable, with chairman Emilio Martinenghi stating "Darwin Airline SA is well capitalised and solvent and able to honour all its obligations towards its creditors."
Alitalia's problem has been covered extensively since it fell into administration in May. The latest rumour this week is that private equity firm Greybull Capital, which owns Monarch Airlines, is considering buying the Italian carrier.
That leaves Air Serbia as the only European carrier left with investment from Etihad. Serbia's national carrier recorded a net profit of EUR0.9 million in 2016 in the year it launched its first transatlantic flights (between Belgrade and New York) and passenger numbers increased 3% to 2.62 million.
These results were released last week, with CEO Dane Kondec saying "The competitive landscape is changing rapidly, not only as a result of the greater number of airlines flying to our hub in Belgrade [among them easyJet, Eurowings, Lufthansa, Norwegian, Turkish Airlines and Vueling], but also from the growth of alternative secondary airports in the region…We must maintain the ability to respond and to continue to make the necessary adjustments to our business…and are keenly focused on achieving our business targets as set out by both our shareholders, the Government of the Republic of Serbia and Etihad Airways."
And what about those outside of Europe?
- In May 2017 Jet Airways recorded a drop in profits for its 2017 fiscal year, with chairman Naresh Goyal stating it had been an "extremely challenging" year.
- Virgin Australia announced an AU$185.5 million loss in its latest financial year up to July 2017 but has positive free cash flow for the first time in years.
- Air Seychelles has posted four years of profit (2012-2015) but its 2016 results are harder to come by. Passenger numbers improved 12.4% in Q1 2017 but financials aren't seen.
Can we expect Etihad to ditch these partners too and what would the future mean for them? This is an unwitting reminder that in partnerships and negotiations, the financial health of any travel supplier is a key consideration.