Emirates Airlines, Dubai’s flagship airlines is in talks to take over its unprofitable competitor, Etihad. If the takeover happens, it would mean that the move would create the world’s biggest carrier for passenger traffic. Sources involved in this hinted that such talks were in place, however, negotiations could fall through at any time.
Emirates on Thursday denied media reports that it was in talks to acquire Abu Dhabi’s Etihad Airways, saying “there is no truth to this rumour.” An email statement was also released by Emirates denying the reports while Etihad refused to comment. According to the above mentioned sources, Emirates could acquire the main airline business of Abu Dhabi’s Etihad, which would keep its maintenance arm.
Speculations have long surfaced about a possible merger — not an acquisition — between Etihad and Emirates, but both carriers have repeatedly denied that. In May, Shaikh Ahmad Bin Saeed Al Maktoum, leader of Dubai Civil Aviation and administrator and CEO of Emirates aircraft and Group, said that proprietors of the two carriers have not discussed a merger. He stated, in any case, Emirates is keen on cooperation with Etihad, with which it has “a magnificent relationship.”
If the deal does go through, the operation would be bigger than American Airlines which has a market value of $19.2 billion. Not only that, it would totally eclipse the other of the U.S big three which is Delta and United Airlines.
Etihad had been continuously incurring losses. This was mainly due to the equity alliance strategy where they invested in a number of failing foreign operators. Moreover, the company came under pressure as a slide in the price of oil led to a drop in travel in crude-based economies. That contributed to a $1.52 billion loss in 2017, taking the 2-year deficit at the airline unit to almost $3.5 billion. On the other hand, Emirates also suffered during the Gulf slump but was quick to recover with net income jumping by two-thirds $1.12 billion.
By Abhishek Aggarwal