Emirates (EK, Dubai International) President Tim Clarke has rejected reports in the international press alluding to possible merger talks between Dubai-based Emirates and its Abu Dhabi-based rival Etihad Airways (EY, Abu Dhabi International).
Last week, German paper Handelsblatt referenced unnamed sources in its reporting claiming the ruling families of the United Arab Emirates (UAE) had discussed a possible merger between the two airlines given the increasingly difficult markets they operate in.
However, in an interview with Bloomberg this week, Clark outright rejected the report as “nonsense” but admitted to a changing playing field for the Gulf-based carriers which, aside from the two UAE-operators, includes Qatar Airways (QR, Doha Hamad International). All three operators are currently grappling with the impact of depressed oil prices as well as increased pressure from the likes of Turkish Airlines (TK, Istanbul Airport) and emerging longhaul LCCs in Europe and Asia.
Having announced a 75% fall in half year profits in November last year, Emirates announced in January that it was in the process of undertaking what it termed a "modest restructuring." According to Reuters, around 1,000 employees left Emirates late last year "for various reasons and largely through natural attrition." It has also deferred deliveries of twelve A380-800s due over the next two years.
As previously reported, as part of its future operational plans, Emirates is studying a possible narrowbody order to assist in opening up thinner, albeit potentially lucrative, routes.
“The dynamic is changing in the Middle East with regard to access to new markets. Our business model was set in the late 1980s, when access was denied to us by many places in the region,” Clarke said adding that the new fleet decision would be left to his successor.
For its part, the chairman of the Etihad Aviation Group, Mohamed Mubarak Fadhel Al Mazrouei, announced in January the Abu Dhabi-backed airline group would “adjust” its airline equity partnerships given the need to “improve cost efficiency, productivity, and revenue”.
Etihad has incurred steep costs following its investments in Air Berlin (1991) (Berlin Tegel) and Alitalia (AZA, Rome Fiumicino) with the former currently undergoing a drastic restructuring of its fleet and network following sustained year-on-year losses. The latter is currently battling strong union opposition to its proposed leaned down operating structure which, Italian media reports state, includes cost cuts of at least EUR160 million (USD171 million) by year-end as well as 2,000 lay-offs.
