Why Emirates Rejected An Etihad Airways Merger

An Etihad Airways Airbus A380-800

In the late 2010s, reports indicated that Emirates was eyeing up a discussion with Etihad Airways over a potential merger that would combine the two airlines.

If approved and proceeded with, the deal could create one of the largest airlines in the world.

However, Emirates would eventually reject a proposed and speculated deal for several reasons.

Overview Of The Proposed Merger

In 2018, talks around Emirates’ interest in potentially merging with Etihad emerged as a landmark headline for the global industry.

If such a deal had gone ahead, it would’ve been labelled the deal of a decade. However, analysts predicted even the century thus far.

Reputable outlet Bloomberg’s led said reports, noting through their sources that the pair were in early discussions over a potential deal. However, it was still in the very early stages.

During this period, Etihad Airways struggled financially and tried to find methods to cut costs. For Etihad, this led to streamlining and discussion over a potential acquisition as a last-ditch attempt to save the company.

Emirates promptly denied such reports of a potential takeover of the close neighbour based in Abu Dhabi.

However, the general public argued that the company would hardly confirm a deal was in discussions considering its magnitude and confidentiality.

Thanks to the nature of the reports, discussion over how a merger would pan out from fleet to routes to employees and all other crucial areas remained unclear.

How Did Discussions Come About?

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

A poor financial state had come from several critical decisions led by executives at the airline across a multi-year period.

This included the most significant aircraft order in company history, which was placed in 2013. While this deal encompassed almost every available widebody aircraft part of the next generation, it caused many issues.

A deal for almost 200 aircraft seemingly meant Etihad Airways would be covered for future growth. However, Etihad fell victim to becoming an airline with too many aircraft.

Additionally, the company would invest in airlines within the industry without distinct planning or structure.

These investments would backfire, with the respective carriers collapsing or entering significant financial struggles.

Ultimately, in the end, Etihad Airways could no longer control its financial position, and the losses began to mount.

At its peak, Etihad Airways was losing billions every financial year in a state that saw them continuously bleeding money.

Off the back of such a poor position, concerns about their long-term future in the industry were present. This was when reports emerged over Emirates’ potentially looking to pounce on such a frustrating position for the Abu-Dhabi-based company.

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.

Why Emirates Rejected A Proposed Deal

Despite reports from several sources and persistent discussion, Emirates would ultimately not move forward with Etihad Airways in a merger capacity.

Emirates continuously rejected claims it was discussing an acquisition of the airline throughout the process. Although many would claim that even if the company were, they would hardly reveal such details.

For Emirates, there were several reasons why it didn’t move ahead with a discussed deal.

Additionally, during the early stages of rumours circling the deal, analysts cited similar geographical positioning, fleets and business models.

A deal between any airline needs to be mutually beneficial. Some predicted that the closeness of the two companies would contribute to an eventual collapse of talks.

Ultimately, for an airline like Emirates with a very successful business model encompassing all areas, adding Etihad Airways to the equation could’ve had more negative repercussions than positive.

Emirates would’ve been forced to juggle not just a large employee base but the routes, base and fleet that come with it.

A Changed Etihad Airways

Following losses amounting to billions, Etihad Airways engaged in a significant turnaround plan to improve its position.

The mission of this turnaround plan was to emerge leaner and more sustainable to survive the long term.

While the global pandemic impacted the duration of the five-year turnaround plan, Etihad Airways has managed to emerge from these losses in a far stronger position.

Thanks to this massive change, Etihad emerged as what Emirates described as a changed company.

Emirates viewed the new and improved Etihad Airways as a carrier that could sustain itself within the industry for the first time.

While Emirates still had a view to collaborate with Etihad Airways, a complete takeover, as discussions initially highlighted in the late-2010s would no longer be optimal for the company.

The Emirates Fleet

Emirates’ fleet currently consists of only two aircraft families, the Boeing 777 and Airbus A380.

Per Cirium, 243 aircraft remain in service, with 26 units currently in storage. However, in the coming decades, this will change drastically.

Emirates will move from operating the 777 and A380 to operating the 777X, 787 and A350 as part of its future fleet.

The Dubai-based carrier cites these aircraft’s opportunities to serve new and existing markets as a critical reason why orders have been made.

While the airline has committed to the A380 until the early stages of 2040, the company will also need aircraft to replace these units.

What Aircraft Etihad Airways Fly

Etihad Airways is committed to several aircraft types to offer a solid and reliable global service.

Notably, it operates a fleet of Airbus A320-200s and A321-200s. With a combined 20 units active, these types are currently the only two that can be classed as narrowbodies.

Away from narrowbodies and to align with Etihad Airways’ long-haul missions, it operates a mixture of widebodies from Airbus and Boeing.

This includes the Airbus A350 series with the -1000, multiple Boeing 777s, and even the world’s largest passenger plane, the Airbus A380.

However, the airline has undoubtedly enjoyed great success with the 787 series. The airline flies multiple variants and a significant amount of Dreamliners.

Daniel Fowkes
15 Nov 2023
· Aircraft 
· Airlines 
· Analysis 

Leave a Reply

Recent Posts

Sign Up

Stay updated with the latest developments in the aviation and aerospace sector

Share this post: