September 17, 2014 / 9:55 AM / 5 years ago

Etihad CEO says model of global airline alliances is 'fractured'

ABU DHABI (Reuters) - The head of Abu Dhabi’s Etihad Airways dismissed global airline alliances pursued by some rivals as a ‘fractured’ model showing signs of strain, adding his Gulf carrier would instead invest in equity stakes and codeshare deals to grow.

Etihad Airways Chief Executive James Hogan attends a news conference in Rome July 16, 2014. REUTERS/Tony Gentile

Etihad has aggressively pursued a global expansion strategy by picking up stakes in eight airlines around the world, including Air Berlin AB1.DE, Aer Lingus AERL.I, Virgin Australia (VAH.AX) and, most recently, Alitalia.

But it has stayed away from global alliances, even as regional rival Qatar Airways joined the Oneworld alliance last year and Dubai’s Emirates airline [EMIRA.UL] forged a revenue-sharing partnership with Qantas (QAN.AX).

“The model of alliances is fractured. See what happened to Qantas, Emirates and British Airways,” Etihad’s Chief Executive James Hogan told reporters on the sidelines of an IATA airlines conference in Abu Dhabi.

“We believe partnerships are better, strong codeshare relationships and equity investments.”

Qantas, which entered into a revenue-sharing partnership with Emirates last year, reported record losses for the year ending June 30.

Etihad has forged 47 codeshare partnerships with different airlines globally, 21 in Europe alone. It signed a deal last month to buy almost half of the loss-making Alitalia, the latest in a series of equity purchases in European carriers.

Gulf airlines are using their central geographic locations and state support to grow their global reach.

European airlines have finally opened up to Gulf carriers, forging partnerships and selling stakes, after decades of distrust and allegations of unfair competition.

Hogan said at the conference that Etihad would take delivery of its first Airbus (AIR.PA) A380 in December this year. Gulf airlines are drawing more passengers to its hubs by showcasing innovative features and comforts inside the superjumbos.

Qatar Airways took delivery of its first superjumbo on Tuesday, joining the largest A380 customer Emirates.

Reporting by Stanley Carvalho; Writing by Praveen Menon; Editing by David French and Clara Ferreira Marques

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