Etihad - Were Hogan’s Investments his Downfall?
The Abu Dhabi-based carrier has been in the spotlight during the past few days because of its planned code share tie up with one-time arch rival, Lufthansa.
On top of this, the carrier announced massive job cuts in the near future.
Now, it seems that top man, James Hogan, will be the first to go!
Too many non-profit partners
The German financial journal, Handelsblatt, announced on Wednesday (21 Dec) that James Hogan, Etihad’s President & CEO is to be removed from his position.
The decision comes apparently from the Etihad Aviation Group Board of Directors.
Hogan, who took up the President & CEO position at Etihad in September of 2006, started his aviation career in Australia with Ansett Airlines. He was with Gulf Air before moving to Etihad.
Hogan’s policy of investing in various loss making airlines has been questioned by many for some years now as most of these carriers were, and some still are, weak market players and basically running non-profit making operations.
The list is quite long, but Alitalia (49%) and Air Berlin (29,21%) in which Etihad has firm stakes and where Hogan had plans to tie them firmly within Etihad’s operations, have turned out to be a financial disaster for the Abu Dhabi-based carrier.
Shares in Air Serbia (49%), Jet Airways (24%) of India, Darwin Air (Switzerland) (34%), Air Seychelles (40%) and Virgin Australia (24,2%) were all part of Hogan’s policy of buying into carriers in order to try and boost Etihad passenger feeder services through its hub in Abu Dhabi.
It has turned out the wrong way
The European airline investments are reported to have cost the Arabian airline a total of €2.5 billion with Air Berlin contributing almost €500 million to this figure in 2015 alone.
The Etihad Supervisory Board has made it clear, although there is to-date no official announcement, that Etihad’s European shareholdings will be drastically reduced.
It seems that Hogan’s removal is the first step necessary seeing that he was the main architect for the today’s Etihad Aviation Group list of companies.
The move to get nearer to Lufthansa could very well have been planned for some time in order to get shot of the Air Berlin misery and maybe even in the near future work out a viable air cargo joint-venture (see CargoForwarder Global 19 December), which would benefit both airlines.
In this sense, Mr Hogan is probably seen as not being part of the future picture.
John Mc Donagh