Planemakers risk order disruption as Etihad reviews strategy

Tuesday, 8 May 2018 00:00 - - {{hitsCtrl.values.hits}}

DUBAI/PARIS/ABU DHABI (Reuters): Airbus and Boeing are preparing for possible changes to dozens of plane orders from Middle East carrier Etihad Airways as it presses ahead with a company-wide review, four sources familiar with the matter said.

Etihad has been reviewing its business since 2016 when investments in other airlines contributed to a nearly $2 billion loss for the Abu Dhabi state-owned carrier.

Etihad is considering its options for over 160 aircraft it has ordered, ranging from swapping models to delaying deliveries to outright cancellations, the sources told Reuters.

A final decision could be based on a combination of the three options, one source said.

Etihad declined to comment. A Boeing spokeswoman declined to comment, citing company policy to “not comment on delivery schedules nor any discussions with customers”. An Airbus spokeswoman declined to comment, telling Reuters talks with customers were confidential.

Few details of the review have been made public but Etihad’s new Group Chief Executive Tony Douglas said on April 30 that the airline aims to develop in “a sustainable way”.

Etihad has 88 Airbus and 78 Boeing jets on order worth tens of billions of dollars, largely from deals signed in 2013, which are scheduled to start delivery from this year. The orders include 62 Airbus A350s and 52 Boeing 787 Dreamliners, according to the two planemakers’ websites. The bulk of the aircraft were ordered when Etihad was pursuing an aggressive expansion strategy to keep pace with regional rivals Emirates and Qatar Airways. Etihad said then that under the agreements with Airbus and Boeing, it could transfer orders to airlines it had invested in. At that time, the airline had stakes in several other carriers.

The expansion strategy seemingly collapsed last year when Air Berlin and Alitalia filed for insolvency after Etihad invested in them.

Air Berlin, one of Etihad’s biggest investments, ceased operations last October, while Alitalia, the most high profile, is unlikely to take any aircraft as insolvency proceedings continue.

Etihad currently holds stakes in four other airlines.