The Emirates And Etihad Airways Merger

Daniel Fowkes
21 Nov 2023
· Airlines 
· Analysis 
An Emirates Airbus A380-861 wearing the new livery departing from Washington Dulles Airport

Emirates and Etihad Airways are industry leaders connecting passengers to and from the Middle East to global destinations.

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

If approved and proceeded with, it would’ve created a global super airline that would captivate the industry. Additionally, it could’ve changed the trajectory for other carriers based in the same region that would be forced to compete with the mega airline.

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

Early Murmurings Of The Merger

Reputable outlet Bloomberg’s leg said reports, noting through their sources that the pair were in early discussions over a potential deal.

Emirates promptly denied such reports, indicating such a deal would not occur. However, the general public argued that the company would hardly confirm a deal was in discussions considering its magnitude and confidentiality.

How Did Discussions Come About?

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

The airline was trying to enter a significant restructuring following poor investment choices in the fleet and airlines that saw finances 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 coming together with Emirates would be a good fit. While Emirates was growing, Etihad Airways somehow needed an out of 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 operated and continue to work on similar routes, and thanks to the proximity of hubs, present heightened competition.

This is ultimately ignoring other companies in the Middle Eastern market that are equally expanding or were a persistent threat to Etihad at the time.

For Etihad, rapid and significant investments in fleet backfired considerably. All came from an order placed in 2013, the most crucial commitment in company history.

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

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

While this was thanks to a turnaround plan, which largely came off successful thanks to government backing, the next wave of difficulties hit.

As long-haul travel collapsed, talk again emerged that the pandemic might be the optimal time for merger discussion to reignite.

Etihad Became A Changed Airline?

However, Tim Clark said Etihad Airways was a changed airline. This opinion came following all the changes they implemented during their turnaround.

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

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

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

Why This Merger Won’t Happen

The pair operate very similar route networks in such proximity and have similar business models, too. This would mean that if Emirates acquired Etihad, they’d only be adding their presence at major airports, not necessarily tapping into new markets, which may not be as lucrative.

If anything, analysts predicted frequencies would be dropped and not all aircraft would come across to 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 mutually benefit the parties in question. That incentive no longer follows Bloomberg’s initial reports for Etihad, which has emerged as a leaner and more sustainable airline.

Mergers And The Impact On Passengers

Customers also likely wouldn’t have benefitted from such a merger. While suitable for Etihad when they were struggling, the likelihood that airfares would rise wouldn’t have bode well. A key concern examined when airlines look towards coming together, alongside the effects on competition.

It’s why so many opposed the Northeast Alliance between JetBlue and American Airlines, which is now cancelled.

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

Understanding The Potential Positives

Analysts say positives may have emerged from such a merger if approved to move ahead.

Question marks over whether the number of airlines in the region were required during the pandemic presented an opportunity for consolidation.

However, in 2023, the two airlines can operate away from each other while still collaborating but primarily forging their path.

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

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  1. Should this happen, I can only hope that Emirates back office and ground operations policies and procedures prevail. The Etihad folks can’t seem to find their way out of a paper bag with both hands

  2. It would be good if Etihad sunsets their loyalty program and integrates into Skywards. That would add a lot of value and make flying from Abu Dhabi attractive.

  3. They will never merge.
    Even when Dubai was struggling during.global.financial crisis.
    Sheikh Kalifa said he would help Dubai financial if he got Emirates. That didnt happen,even though he got Burj Kalifa , Dubai Metro and many others.
    Emirates is not owned by Sheikh Mohammed .
    Don’t forget Abu Dhabi may not have the tourists or the glitz of Dubai, but they do have the money.
    They are richer than Saudi.

  4. I guess it will not happen. Etihad Airways and Qatar Airways were raised to enhance the prestige of their oil rich owners at local as well as global level. Hence profitability is a secondary objective for them. These airlines are expected just to minimise the losses as much as possible. The owners of Emirates on the other hand are no more oil rich government. Profitability is therefore its compulsion for survival.

  5. I think merger will proceed as it’s Sheikh Mohammed bin Zayed’s vision and Sheikh Mohammed bin Rashed can’t deviate from order or literally say no.!

  6. Etihad airways should consider free or nominal charges for 1 or 2 days break up holiday of Abu Dhabi for long halt flight like USA, Canada ,Europe or South Africa & Latin America. This will boost not only the air lines business but also local tourism industry.

  7. Not a good merger as both airlines have their own brand status. Emirates stands for a dependable airline backed by the Dubai high powers and is very professionally managed. Etihad did start well with Naresh Goyal getting in his positive experience of Jet Airways. But the same model of JetAirways could not be continued as eventually Jet Airways collapsed.
    Two different principles will never withstand the new merger and its best to leave it alone. If Emirates buys Etihad and has full control, then it is better. But why buy Etihad, what does it bring to the table ??? Honestly nothing. In terms of aircraft, routes, management, staff, operations cargo …absolutely nothing !!!
    Emirates, you have carved a very reliable niche in the industry. Don’t mess it …

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