Emirates & Etihad Merger: Could It Really Happen?

Emirates and Etihad Airways are industry leaders, connecting passengers between the Middle East and global destinations.

However, in the late 2010s, discussions and reports emerged that Emirates was exploring a potential merger with the struggling Etihad Airways.

If approved and carried out, it would’ve created a global super airline that would have captivated the industry. Additionally, it could’ve changed the trajectory of other carriers in the region, forcing them to compete with the mega airline.

But why didn’t Emirates move forward with a merger with Etihad? What sparked the initial discussion, and what does the companies’ future outlook look like?

Early Murmurings Of The Merger

Bloomberg reported, citing sources, that the pair were in early discussions over a potential deal.

Emirates promptly denied the reports, saying such a deal would not happen. However, the general public argued that the company would be unlikely to confirm a deal was under discussion, given its magnitude and confidentiality.

How Did Discussions Come About?

At the time of Bloomberg’s initial reports of a potential deal, Etihad Airways was in significant strife.

The airline was pursuing a major restructuring after poor fleet investment decisions caused its finances to implode.

Losses amounted to billions; many saw the company as a threat if something didn’t change promptly. Finding ways to survive was part of the turnaround procedure.

Some believed that joining Emirates would be a good fit. While Emirates was growing, Etihad Airways needed an exit from its situation.

Etihad’s Own Struggles

Etihad Airways struggled with increasing competition in a sector comprising Emirates and Qatar Airways, to name a few.

These companies operate and continue to operate on similar routes, and thanks to the proximity of their hubs, they present heightened competition.

This ultimately ignores other companies in the Middle Eastern market that were expanding just as fast or posed a persistent threat to Etihad at the time.

For Etihad, rapid and significant fleet investments backfired considerably. It all stemmed from an order placed in 2013, the most crucial commitment in the company’s history.

Such a purchase of flashy items was necessary for the future of the business but didn’t factor in many things into the equation. Etihad was left with too many planes, mounting losses, and mounting pressure.

Sir Tim Clark, Emirates President, has always remained adamant that the carrier would not merge with Etihad Airways. This came even as Etihad Airways began to emerge from its turbulent financial crisis during the pandemic.

While a turnaround plan, largely backed by the government, helped, the next wave of difficulties hit.

As long-haul travel collapsed, talk resurfaced that the pandemic might be the optimal time to reignite merger discussions.

Etihad Became A Changed Airline?

However, Tim Clark said Etihad Airways had changed. This view followed the changes they implemented during their turnaround.

These changes included downsizing, cutting routes, and, as Tim Clark put it, emerging as a far leaner airline than ever before.

Tim Clark believed Etihad was fit for its operations and could sustain itself as an essential airline in the industry long term. This means the carrier is finally fit for its operations and can sustain itself as a business long term. Whereas maybe in the past, you could argue that it wasn’t.

While the two airlines have looked to collaborate in the past, Emirates taking full control of Etihad Airways didn’t seem like the right fit.

Why This Merger Won’t Happen

The pair operate very similar route networks in close proximity and have similar business models. This would mean that if Emirates acquired Etihad, it would only add presence at major airports, not necessarily tap into new markets, which may not be as lucrative.

If anything, analysts predicted frequencies would be cut, and not all aircraft would join the Emirates fleet. The Dubai-based airline has a route and fleet plan that works currently. Any potential additions would likely overcomplicate the business and disrupt long-term planning.

Any airline acquisition deal must benefit both parties. That incentive no longer holds for Etihad, which has emerged as a leaner, more sustainable airline.

Mergers And The Impact On Passengers

Customers also likely wouldn’t have benefitted from such a merger. While it may have suited Etihad when it was struggling, the likelihood of rising airfares wouldn’t have boded well. A key concern examined when airlines look towards coming together is the effects on competition.

That’s why so many opposed the Northeast Alliance between JetBlue and American Airlines, which has since been cancelled.

On the opposing side are Asiana Airlines and Korean Air, which have struggled to complete a tie-up, but concerns about airfares and competition haven’t been as dominant.

Understanding The Potential Positives

Analysts say such a merger could have produced positives if it had moved ahead.

Question marks over whether the region needed that number of airlines during the pandemic created an opportunity for consolidation.

However, in 2023, the two airlines can operate independently while still collaborating, but primarily forging their own paths.

Ultimately, such a deal never worked in either party’s favour, despite increased discussion, rumours, and concrete reports.