Emirates and Etihad Exploring Synergies, No Merger Anytime Soon

Dubai is hosting Aviation Security Conference and Emirates executives are in attendance. Tim Clark spoke to media during the event and had a lot of new information to share. One of the most important information was regarding the future of Emirates and Etihad.

It has been said several times before. Emirates and Etihad are unlikely to merge anytime soon. Tony Douglas, CEO of Etihad, had said the same thing not too long ago.

Background

Looking back in time, the seeds were probably sown by this Bloomberg article (link). The article was titled “Emirates’ Clark Says Any Etihad Merger Plan Is Up to Shareholders”

Let us just say that the headlines and the content didn’t match. This is what Tim Clark had said

“That (merger) is in the hands of the shareholders, On the short-term, medium-term horizon, I would say no.”

Has Anything Changed?

Tim Clark pretty much reiterated his stance.

“Obviously, Etihad has to remain Etihad, and Emirates has to remain (Emirates)”

However, he did mention that both the airlines have been co-operating in the back-end and they are looking at increasing this further. I only hope this does not let the ‘merger’ talk soaring!

“We have a closer working relationship with Etihad than we’ve ever had. Tony Douglas and I often have in-depth conversations about what we can do behind the scenes … we share back of house stuff, there’s absolutely no reason why we shouldn’t share it — as long as we do not enter into competition law in all the areas of the market we serve which we don’t, of course.”

Obviously given the proximity of their hubs – Abu Dhabi and Dubai are within 2 hours driving distance – there is great potential to achieve synergies. Especially with regards to the back-end operations, aircraft maintenance, repairs etc.

Final Thoughts

Many outside of gulf countries do not understand why UAE needs two hubs at such a short distance. It is important to understand that Emirates and Etihad have completely different ownership. I would be surprised if the airlines merge any time soon.

However, synergies – particularly on the cost side – can improve financial performance of both airlines.