Buying Air Berlin stake a clever game changer by Etihad Airways to get to the heart of Europe
Posted on 20 December 2011 with no comments from readers
Abu Dhabi’s state-owned airline Etihad is cleverly expanding its feeder network in Europe’s richest nation through the acquisition of a 29.2 per cent stake in Air Berlin, a massive jump on its previous 2.99 per cent interest in the low-cost carrier.
For Air Berlin this means a $225 million cash infusion to pay for five-years of fleet development. Together the two airlines carry 40 million passengers a year in 233 aircraft and have annual revenues in excess of $9 billion.
Guten tag
Not surprisingly Air Berlin will move its Middle East HQ from Dubai to Abu Dhabi but the companies said they will cooperate at many levels to achieve business synergies and cost savings. Etihad will have two seats on the board of Air Berlin.
Through code-sharing Etihad passengers will have access to a wide distributor network of flights within Europe. Air Berlin passengers will have access to Etihad’s flights to the Far East and Australasia. There will also be an Air Berlin service to Abu Dhabi. The frequent flyer programs of the two airlines will be integrated.
Etihad CEO James Hogan said that the tie-up with Air Berlin is just the start of what he hopes will be a number of similar deals to enhance the Etihad network. It certainly shows how the financial weakness of some carriers leaves an opportunity for cash-rich states like Abu Dhabi to take advantage for long-term business gain.
Best of class
However, aviation veterans like Mr Hogan will have a very clear shopping list and will be looking for the best in their industry and not the many desperate dogs of the sector. From its attractive young flight attendants to great network, Air Berlin has a proven business model and a great home market. It’s a great fit with the young Abu Dhabi carrier.
For the business traveler this alliance opens up a whole new world of convenience in flights to the continent in general and Germany in particular. Etihad has secured a whole new hinterland of passengers in the process.
