Tony Douglas was an interesting choice as CEO of Etihad. Unlike a lot of top professionals across other airlines, he comes with little commercial airline experience. However, he had worked for a number of large government-owned companies in Abu Dhabi.
His appointment was a clear signal of change in Etihad’s strategy.
In an interview given to Arabian Business, Tony Douglas addressed all major issues concerning Etihad. He was to the point, except when dealing with the questions regarding Etihad’s strategic investments.
This is the interview in a nutshell.
Etihad trimmed its losses in 2018. However, the losses still stood at $1.3 billion. Tony, of course, puts a positive spin to it.
“What I would say, the trajectory is what I was teasing out, the 34 percent over the last two years. So, in one way, that gives the sense that we are making the right steps in the right direction.
“We are very open in the knowledge that we still have a lot to do… Did you get lucky, or is this a function of hard graft? If you look at the ratios in there, yields [usually calculated as revenues per passenger kilometres] increased by 4 percent – that is by taking lossmaking routes out – cost has improved by 3 percent and I’m not including a massive increase in fuel. I guess it a clichéd way of describing it: in the world where little rocket science exists these days, it is back to basics.”
If you look at Etihad’s results more closely, you will notice that without the impact of high fuel prices, Etihad’s losses could have been lower by a further $300 million. I had discussed this in an earlier post – Etihad Financial Results – A different perspective.
Tony is clear that the Hogan-era strategy of investments in other airlines is past now.
“I think what we have made quite clear is that we are not going to repeat the previous strategy, described as a quasi-alliance, where sometimes taking quite small shares in other airlines where we don’t have control.”
On being asked about the future of its investments, he doesn’t offer much insights.
“That result presentation is just Etihad and not the broader network. It is specific to Etihad.”
On this note, there has been a development at Jet Airways. The lenders to Jet Airways have taken control of the airline by converting their debt to equity. As a result, Etihad’s stake has reduced from 24% to 12%. Further, the incumbent Naresh Goyal has resigned from the board.
The latest update is that Etihad’s board will be meeting on March 31 to take a call on their future with Jet Airways.
Unbundling of Fares
“There are additional routes where we think there is opportunity that we [can] put more on. There is no rocket science behind it. I have been involved in aviation in one way or another for over 30 years and I guess way back then the networks were probably analysed once a year kind of thing.”
“I am with the persuasion that it needs to be a daily, weekly kind of thing, the market is so dynamic. Therefore, what you are seeing, and I hope you will see going forward, is an Etihad that is far more agile with what is going on with the market.”
Clearly, someone is trying to impress upon the fact that commercial airline business isn’t too complicated.
Tony also talks about the recent $22 billion cancellation of aircraft orders.
“That was a massive turning point for us at Etihad. We have released ourselves from 100 aircraft, which we were hither contractually obligated to accept, but we were not able to consume within our fleet.”