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Mon, Mar 30, 2009 - Page 10 News List

Airline industry set for consolidation, Etihad chief says

BLOOMBERG

The world’s airline industry is heading for more consolidation because of the global recession and a drop in air travel, the United Arab Emirates’ state-owned airline said.

Combinations such as Air France-KLM Group, Europe’s biggest airline, will probably become more common as companies seek to cut costs, Etihad Airways chief executive officer James Hogan said yesterday on Australian Broadcasting Corp’s Inside Business program.

Etihad, based in Abu Dhabi, will seek ways to work more closely with Qantas Airways Ltd, Australia’s largest carrier, he said.

GLOBAL LOSSES

Losses by the global airline industry may total US$4.7 billion this year, almost 90 percent higher than previously forecast, the International Air Transport Association said last Tuesday.

Air France said on Friday it would have a loss for the year ending tomorrow, while British Airways Plc, Europe’s third-largest carrier, was forecasting an operating loss of about £150 million (US$215 million) for the same period.

“We are already seeing a number of airlines under huge pressure,” Hogan said on the program.

“Airlines will have to make decisions as any other business does with regard to their network, their fleet and whether they rationalize, consolidate or continue to invest in expansion,” Hogan said.

EXPANDING

Etihad itself is forecasting a 15 percent increase in passenger numbers this year to 7 million as it expands its network to 55 destinations from 50 and adds aircraft, the airline said on March 18.

The airline is taking market share from the Asian and European hubs, while business within the Gulf region is “still strong,” Hogan said.

Etihad, which starts daily flights from Abu Dhabi to Melbourne today, will still be “under pressure” to achieve its target of becoming profitable by next year, Hogan said.

“Let’s see how the second half of this year goes,” he said.

Sydney-based Qantas announced a codeshare arrangement with Etihad earlier this month for four Middle East destinations.

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