Bloomberg News: “Emirates Seeks Etihad Takeover to Create World’s Largest Airline”

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Bloomberg News was today reporting that Emirates is looking to take over unprofitable Etihad that has recently been struggling after its equity alliance collapsed (airberlin was liquidated and Alitalia is in bankruptcy).

Etihad

The talks according to Bloomberg News that both airlines have now denied are in preliminary stage. The merger would see Emirates taking over Etihad’s airline business.

You can access the Bloomberg’s article here of which below is an excerpt:

Both airlines initially declined to comment, before later denying that any talks were underway. Were a transaction to go ahead the enlarged airline operation would be bigger than that of American Airlines Group Inc., which has a market value of $19.2 billion.

Any deal would require the blessing of the rulers of the richest sheikhdoms in the United Arab Emirates. For Abu Dhabi, which sits on 6 percent of global oil reserves, it would advance a drive to overhaul state-controlled entities as it adapts to lower crude prices. The airlines have traditionally been arch rivals, with their hubs competing to attract the same transfer passengers making long-distance trips between Asia and the West.

A combination of the airlines would provide further evidence of the sheikdoms consolidating businesses to boost competitiveness. Abu Dhabi and Dubai companies formed Emirates Global Aluminium, one of the world’s largest producers, in a $15 billion combination in 2013, and the two have studied a merger of their stock exchanges. The Dubai government was also the driving force in compelling Emirates to cooperate with local discount carrier FlyDubai.

Conclusion

Etihad has already significantly cut back on its global ambitions and now mainly wishes to focus on point-to-point traffic from its Abu Dhabi hub rather than shuffling people through.

The airline lost billions after billions on its prior strategy investing into failing airlines that would feed into its Abu Dhabi hub and beyond.

Emirates and Etihad have both denied this Bloomberg News report but it is up to the Sheikhs and rulers of Dubai and Abu Dhabi to decide what they want to do. Is there really need for two global airlines in neighboring emirates competing with each other?

How would they combine the airlines? Keeping both airports but only one brand going forward? I have found the Etihad Guest to be more worthwhile frequent flier program than Skywards due to number of partners.

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