ArchGuy1
Topic Author
Posts: 218
Joined: Wed Jul 10, 2019 11:35 pm

Etihad Financial Problems

Mon Jul 15, 2019 2:34 am

Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.
 
dredgy
Posts: 405
Joined: Fri Jun 16, 2017 5:13 am

Re: Etihad Financial Problems

Mon Jul 15, 2019 2:39 am

ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.


Inherently untrue - Qatar airways is also unprofitable and Emirates is having some of it's lowest profits ever.

But it comes down to management - Emirates is well-run by a team of competent people. The other two less so. Etihad overexpanded too quickly.
 
TryToFlySomeday
Posts: 306
Joined: Wed Aug 30, 2017 9:51 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 2:40 am

ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.

Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.
Pakistan's aviation sector is coming back. It won't be as strong as our eastern neighbor, nowhere close, but it's going to grow over time. Stand by and watch.

Born to Pakistani parents near ORD; raised and based near ORD.
 
ArchGuy1
Topic Author
Posts: 218
Joined: Wed Jul 10, 2019 11:35 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 4:06 am

TryToFlySomeday wrote:
ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.

Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.

What is the situation with Emirates.
 
crownvic
Posts: 2439
Joined: Wed Oct 20, 2004 10:16 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 4:20 am

Has anyone heard if there is any truth to the rumor that the A350-1000s are not going to go into service (meaning they are being cancelled)? Yes, i know one is already fully painted and doing test flying.
 
User avatar
SCFlyer
Posts: 237
Joined: Tue Oct 23, 2018 11:14 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 4:57 am

TryToFlySomeday wrote:
Etihad should quit flying to the US and Australia.


EY would need to sell off their stake in VA (in regards to Australia) and on the USA side quit their partnerships with AA (and cancel any rumoured upcoming negotiations for the UA partnership if that rumour happened to be true).
 
TryToFlySomeday
Posts: 306
Joined: Wed Aug 30, 2017 9:51 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:29 am

ArchGuy1 wrote:
TryToFlySomeday wrote:
ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.

Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.

What is the situation with Emirates.

Emirates made 237 million USD last year I believe, but that’s a drop from I think was over a billion USD. If Air India and Pakistan International Airlines had competent service, they could kill Emirates’s business. Air India did shred Etihad in San Francisco.
Pakistan's aviation sector is coming back. It won't be as strong as our eastern neighbor, nowhere close, but it's going to grow over time. Stand by and watch.

Born to Pakistani parents near ORD; raised and based near ORD.
 
TryToFlySomeday
Posts: 306
Joined: Wed Aug 30, 2017 9:51 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:30 am

SCFlyer wrote:
TryToFlySomeday wrote:
Etihad should quit flying to the US and Australia.


EY would need to sell off their stake in VA (in regards to Australia) and on the USA side quit their partnerships with AA (and cancel any rumoured upcoming negotiations for the UA partnership if that rumour happened to be true).

True, but how much money does EY even make on flights to America and Australia?
Pakistan's aviation sector is coming back. It won't be as strong as our eastern neighbor, nowhere close, but it's going to grow over time. Stand by and watch.

Born to Pakistani parents near ORD; raised and based near ORD.
 
jghealey
Posts: 111
Joined: Fri May 11, 2018 5:46 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 2:09 pm

Their investments in failing foreign airlines certainly didn't help. Nearly all have gone bust or are now on government support. Likewise I guess the lack of aircraft commonality within their fleet created further problems.
 
waly777
Posts: 725
Joined: Sun Oct 07, 2012 7:11 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 3:17 pm

TryToFlySomeday wrote:
SCFlyer wrote:
TryToFlySomeday wrote:
Etihad should quit flying to the US and Australia.


EY would need to sell off their stake in VA (in regards to Australia) and on the USA side quit their partnerships with AA (and cancel any rumoured upcoming negotiations for the UA partnership if that rumour happened to be true).

True, but how much money does EY even make on flights to America and Australia?


More than enough to be some of the most profitable in the network.
The test of first-rate intelligence is the ability to hold 2 opposed ideas in the mind concurrently, and still function
 
dmstorm22
Posts: 513
Joined: Wed Jun 15, 2016 1:49 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 3:28 pm

TryToFlySomeday wrote:
ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.

Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.


Yup.

This is simplifying things, but they repeated the same mistakes of Swissair - buying up the wrong airlines and having everything spiral downward
 
User avatar
lightsaber
Moderator
Posts: 17718
Joined: Wed Jan 19, 2005 10:55 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:15 pm

dmstorm22 wrote:
TryToFlySomeday wrote:
ArchGuy1 wrote:
Why exactly is Etihad having so many financial problems when Emirates and Qatar Airways are enjoying high levels of profitability.

Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.


Yup.

This is simplifying things, but they repeated the same mistakes of Swissair - buying up the wrong airlines and having everything spiral downward

In a nutshell, the US and Australia flying is too 'me too.'

If India allowed an international to International hub, fed with domestic too, they could bury two of the three of the ME3. As QR and EY seem willing to 'invest' through anything, EK isn't going away as they are the one run well.

But EK must down gauge as the connecting market is seeing bypass and more competition.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
dmstorm22
Posts: 513
Joined: Wed Jun 15, 2016 1:49 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:18 pm

lightsaber wrote:
dmstorm22 wrote:
TryToFlySomeday wrote:
Qatar Airways is not enjoying high levels of profitability. They lost 69 million dollars USD about a year or two ago due to the blockade.

Etihad Airways is having financial problems because they invested in failing airlines in hopes of doing two things:

1. Hoping to turning them around
2. To gain market share

The second part was achieved, the first one was not. In turn, airberlin and Jet Airways both went out of business, and Alitalia is basically on life support.

Etihad acquired a lot of the losses and burden of the airlines they invested in.

Etihad should try to become a regional airline and focus on Abu Dhabi to Middle East flights. Maybe make an exception for India, Pakistan, Bangladesh, and London.

Etihad should quit flying to the US and Australia.


Yup.

This is simplifying things, but they repeated the same mistakes of Swissair - buying up the wrong airlines and having everything spiral downward

In a nutshell, the US and Australia flying is too 'me too.'

If India allowed an international to International hub, fed with domestic too, they could bury two of the three of the ME3. As QR and EY seem willing to 'invest' through anything, EK isn't going away as they are the one run well.

But EK must down gauge as the connecting market is seeing bypass and more competition.

Lightsaber


It's amazing to think what both India and China could do if they were able to put together a truly viable International to International connecting operation (I realize China may be better at this already) given the domestic feed they can add to the equation, a size that will continue to grow rapidly as more and more of their massive populations get the means to fly.
 
User avatar
Faro
Posts: 1895
Joined: Sun Aug 12, 2007 1:08 am

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:44 pm

EY’s root financial problem is having shareholders with very deep and bounteous pockets...so when they chose to model themselves after the defunct Swissair business model...investing in a wide range of non-controlling or quasi-controlling interests in other international carriers in order to form an airline conglomerate of sorts...it wasn’t that big an issue if they ended up making colossal losses...just junk top management and go back, cap in hand, and ask for more money from the nice shareholder...a very docile, benign and germane financial environment...


Faro
Last edited by Faro on Mon Jul 15, 2019 6:51 pm, edited 2 times in total.
The chalice not my son
 
ScottB
Posts: 6597
Joined: Fri Jul 28, 2000 1:25 am

Re: Etihad Financial Problems

Mon Jul 15, 2019 6:49 pm

jghealey wrote:
Their investments in failing foreign airlines certainly didn't help. Nearly all have gone bust or are now on government support. Likewise I guess the lack of aircraft commonality within their fleet created further problems.


Lack of commonality in the fleet is the least of Etihad's problems. Delta has close to a dozen different types in its mainline fleet and is one of the world's most profitable airlines.

EY's key problem is really that they are competing in a market segment with carriers having greater economy of scale (EK) and/or a stronger home market (TK). The losses from investing in troubled foreign carriers have almost certainly diminished the sovereign wealth fund's appetite or ability to put more money into Etihad, and there's probably a realization that the connecting flows across Southwest Asia may not be large enough to support more than a couple of carriers the size of EK/TK.
 
VSMUT
Posts: 2823
Joined: Mon Aug 08, 2016 11:40 am

Re: Etihad Financial Problems

Mon Jul 15, 2019 7:21 pm

dmstorm22 wrote:
This is simplifying things, but they repeated the same mistakes of Swissair - buying up the wrong airlines and having everything spiral downward


Swissairs mistake was not just buying up ailing airlines, it was more about not integrating them properly. They all competed against each other, eroding profits from other Sair group airlines.

Not quite the same for Etihad, they did at least try to strengthen and assist the subsidiaries. As I recall, they centralized the hiring process and training for all the airlines in Abu Dhabi. There was extensive code sharing, even some internal ACMI flying.
 
ethernal
Posts: 82
Joined: Mon May 06, 2019 12:09 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 7:25 pm

ScottB wrote:
jghealey wrote:
Their investments in failing foreign airlines certainly didn't help. Nearly all have gone bust or are now on government support. Likewise I guess the lack of aircraft commonality within their fleet created further problems.


Lack of commonality in the fleet is the least of Etihad's problems. Delta has close to a dozen different types in its mainline fleet and is one of the world's most profitable airlines.


I agree that lack of fleet commonality is not the root cause issue here, but let's not compare apples to oranges. There is such a thing as minimum efficient scale (where returns to increased scale go down significantly) and Etihad is almost certainly on the wrong side of it.

If you consolidate by type (e.g., A333ceo and A332ceo are the same), every Delta frame (excluding the ones still ramping up - e.g., A220) has more frames than the Ethiad frame of the largest type (32 A321ceo and 34 787) except for the 777.

A220: 19 in service (76 on order)
A320ceo: 204 in service (42 on order)
A330ceo: 42 in service
A330neo: 2 in service (33 on order)
A350: 13 in service (12 on order)
717: 91 in service
737: 217 in service
757: 127 in service
767: 77 in service
777: 18 in service
MD88/90: 108 in service

Up until recently (MD-88 retirements), four of Delta's 11 fleet types were larger than Etihad's entire fleet.

The level of scale between the two fleets is just not comparable. The only fleets where Etihad has probably reached MES is the 787 and A321ceo. Compare that to Delta where (upstart frames aside) the only frames where they don't have MES is probably the 777 and arguably some of the subtype variants (namely 753, 764, and 737-700).
 
User avatar
FCOTSTW
Posts: 172
Joined: Fri Mar 23, 2018 8:14 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 7:41 pm

Etihad is (was) a shareholder at Alitalia. With the Italian government owning 50 % of the airline very soon, apparently Etihad is not going to be part of the "new" Alitalia. DL should have a 10%, while the remining 40 % will be split between two parties, such as the Toto Group (the founders of Air One), Sergio Cragnotti (the owner of S. S. Lazio), Avianca' s Germán Efromovich, or Benetton' s Atlantia group. I am wondering if this has anything to do with the need to generate liquid assets or if it is simply part of a regular exit strategy.
 
dmstorm22
Posts: 513
Joined: Wed Jun 15, 2016 1:49 pm

Re: Etihad Financial Problems

Mon Jul 15, 2019 8:05 pm

VSMUT wrote:
dmstorm22 wrote:
This is simplifying things, but they repeated the same mistakes of Swissair - buying up the wrong airlines and having everything spiral downward


Swissairs mistake was not just buying up ailing airlines, it was more about not integrating them properly. They all competed against each other, eroding profits from other Sair group airlines.

Not quite the same for Etihad, they did at least try to strengthen and assist the subsidiaries. As I recall, they centralized the hiring process and training for all the airlines in Abu Dhabi. There was extensive code sharing, even some internal ACMI flying.


Fair point. As I said it was oversimplifying the situation.

I do wonder what EY would be right now if they never bought into AB or 9W
 
ScottB
Posts: 6597
Joined: Fri Jul 28, 2000 1:25 am

Re: Etihad Financial Problems

Mon Jul 15, 2019 8:43 pm

ethernal wrote:
I agree that lack of fleet commonality is not the root cause issue here, but let's not compare apples to oranges. There is such a thing as minimum efficient scale (where returns to increased scale go down significantly) and Etihad is almost certainly on the wrong side of it.

If you consolidate by type (e.g., A333ceo and A332ceo are the same), every Delta frame (excluding the ones still ramping up - e.g., A220) has more frames than the Ethiad frame of the largest type (32 A321ceo and 34 787) except for the 777.

...

The level of scale between the two fleets is just not comparable. The only fleets where Etihad has probably reached MES is the 787 and A321ceo. Compare that to Delta where (upstart frames aside) the only frames where they don't have MES is probably the 777 and arguably some of the subtype variants (namely 753, 764, and 737-700).


Eh, the variety in the Etihad fleet is quite reasonable for the breadth of capacities and/or ranges it covers, apart from the overlap between the A330s and 787s. Arguably they don't (and never did) need the A380 at the top end, but if we view the 787s as gradually replacing the A330s, the fleet plan is quite logical: A32X in the narrowbody space, 787 for small twin-aisle, 77W for large twin-aisle, and A380 for VLA.

But to some degree, we're hinting at the same thing. The connecting and home markets probably aren't large enough to support another carrier as large as EK or TK, so EY has little hope of reaching the necessary scale to compete on costs or network with the big dogs.
 
Sokes
Posts: 183
Joined: Sat Mar 09, 2019 4:48 pm

Re: Etihad Financial Problems

Tue Jul 16, 2019 4:35 am

lightsaber wrote:
the US and Australia flying is too 'me too.'
Lightsaber

Are there people flying from the US to India on these planes or does US (west) -India traffic mostly has a stopover in Europe?
In other words is it mostly O+D or connecting US to closeby Arab places which don't have much connections from Europe?
Why can't the world be a little bit more autistic?

Popular Searches On Airliners.net

Top Photos of Last:   24 Hours  •  48 Hours  •  7 Days  •  30 Days  •  180 Days  •  365 Days  •  All Time

Military Aircraft Every type from fighters to helicopters from air forces around the globe

Classic Airliners Props and jets from the good old days

Flight Decks Views from inside the cockpit

Aircraft Cabins Passenger cabin shots showing seat arrangements as well as cargo aircraft interior

Cargo Aircraft Pictures of great freighter aircraft

Government Aircraft Aircraft flying government officials

Helicopters Our large helicopter section. Both military and civil versions

Blimps / Airships Everything from the Goodyear blimp to the Zeppelin

Night Photos Beautiful shots taken while the sun is below the horizon

Accidents Accident, incident and crash related photos

Air to Air Photos taken by airborne photographers of airborne aircraft

Special Paint Schemes Aircraft painted in beautiful and original liveries

Airport Overviews Airport overviews from the air or ground

Tails and Winglets Tail and Winglet closeups with beautiful airline logos