Etihad alliances pays off

ETIHAD AIRWAYS has heralded a successful first year of its equity alliance strategy, after a financial reporting season which saw each of the five airlines within the alliance – airberlin, Air Seychelles, Virgin Australia, Aer Lingus and Etihad Airways – announce profitable performances.
The airlines’ individual and collective results were boosted by a number of measures, including growing codeshare traffic between their networks, successful joint sales and marketing efforts, and a range of increasing business and cost synergies, points out James Hogan, Etihad Airways’ president and chief executive.
“2012 was a year in which the global economy remained very tough and in which airline industry profits as a whole shrank, for the second successive year,” he states.
“Yet each of the airlines in our equity alliance showed strong financial performances with each reporting a profit.”
During the period, Etihad Airways reported a second year of earnings before interest and tax (US$170 million) and net profit (US$42 million), in only its ninth year of operation. 
Etihad’s equity alliance model has seen increasing cooperation with each of its equity investment airlines.
The Abu Dhabi-based carrier has initiated a range of business and cost synergy programmes, covering fleet and engine acquisition, maintenance, recruitment and training, and joint marketing. 
It has instigated centres of excellence, in which operational and commercial expertise is pooled to deliver best practice across the group.
Hogan observes: “We go much, much further than the legacy alliances. Our new model gives benefits on both sides of the equation – revenue and costs.”
In its latest business forecast, published in December 2012, IATA forecast an overall drop in global airline industry profits, from US$8.8 billion in 2011 to US$6.7 billion in 2012.
“The overall economic outlook remains challenging in 2013. The strengths of our equity alliance point towards a positive year ahead, with many further benefits to be unlocked for each of us,” Hogan adds.
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