Etihad’s interim appointments are a holding pattern

Etihad Airways, in a surprise announcement yesterday, appointed Ray Gammell as it’s interim Group CEO, and confirmed that James Hogan, current President and Group CEO, will leave the company on 1 July 2017.

Note the use of the word Interim.

Gammell joined Etihad in 2009 and was the group’s Chief People & Performance Officer. He has already taken up his new responsibilities.

A parallel handover will occur as Ricky Thirion, previously SVP Group Treasurer becomes Group CFO, replacing James Rigney who will also leave the company on 1 July 2017. Thirion joined Etihad Airways in 2007 and is the current.

The move comes as Etihad finds itself in the spotlight of the dramatic decline of Italian flag carrier Alitalia, in which the Gulf carrier owns a 49pc stake.

The Hogan strategy since joining Etihad 10 years ago has been to take minority stakes in airlines in the partial hope of turning their performances around but also to funnel their traffic through Etihad’s Abu Dhabi hub.

Alitalia, which has received €7bn (£5.9bn) from the state in the past 10 years, entered administration earlier this month after workers rejected a plan to cut its 12,500-strong workforce and impose pay cuts.

The plan would have paved the way to a €2bn refinancing by shareholders, including Etihad.

The Italian government last week granted Alitalia a €600m bridging loan for the next six months, and the airline said its flight schedule would continue.

Alitalia is near death. There will be little in the way of return, financial or reputational for Etihad.

Etihad’s other headache is Airberlin. Last week, it reported a loss of €781 million, making the total “hit” for Etihad a cumulative €1.9 billion over the five years it has been a shareholder.

Abu Dhabi also has to keep the German airline in business – and that has a cost.

This is bad news for Etihad and Abu Dhabi. A strategy that was offered as an alternative to the expensive organic growth plans of Emirates and Qatar Airways has turned into a mechanism for subsidizing two of the biggest loss-makers in European aviation.

Policymakers in the UAE capital, struggling to balance the budget in the new era of low oil prices, did not expect that.

Maybe the fundamental issue is that there are just too many airlines operating from the region. Realistically, Emirates and Qatar — the two biggest — are way ahead of Etihad. The rumors of a few weeks back of a merger between the two UAE airlines may make strategic sense despite the logistic headaches.

H.E. Mohamed Mubarak Fadhel Al Mazrouei, Chairman of the Board of the Etihad Aviation Group, commented that the airline is “now in the advanced stages of recruitment for a new Group CEO…and we expect to make an announcement in the next few weeks.”

So the Gammell appointment is very short term; presumably allowing James Hogan to depart earlier than 1 July and Mr Gammell to take a higher profile role under the incoming new CEO.

There remains speculation that the new CEO will be Christophe Muller from Emirates with the suggestion that this will bring the two airlines closer together.

Interesting times ahead for aviation in the UAE.

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