Etihad set to announce code share tie-up

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Etihad Airways, the Abu Dhabi-owned airline, is set to announce a far-reaching code share agreement with Air France-KLM on Monday, two people familiar with the agreement said.

The deal, which will not include an equity stake, signals a thawing of relations between Europe’s flag carriers and the younger Gulf airlines, which are aggressively expanding their reach.

In a separate development, Qatar Airways is on Monday set to announce that it will join oneworld, the global airline alliance led by American Airlines and British Airways, in another sign that Europe’s traditional hostilities to Gulf airlines are being set aside.
Of the main European flag carriers, Air France-KLM is the most strategically challenged, weighed down by a large debt load and high operating costs. The code share comes as Air France goes through a broad restructuring that includes cutting 5,000 jobs or some 10 per cent of the domestic work force.

In addition to Etihad’s tie-up, another code-share will be announced on Monday between Air Berlin, in which Etihad bought a 29.2 per cent stake in December, and Air France, furthering strengthening Etihad’s European links. Etihad and Air France-KLM declined to comment on either code share agreement. Air Berlin could not be reached for comment.
While tensions may have cooled, the Gulf players still have their fair share of critics. United of the US said in June that the Gulf airlines represented a strategic threat, while Germany’s Lufthansa complained in May that it was not competing on a level playing field with them.

In a highly competitive region Etihad has singled itself out from rivals Qatar Airways and Emirates by taking several equity stakes in its partners. Aside from Air Berlin, Etihad has expanded its global network through three other equity stakes including a 10 per cent holding in Virgin Australia, a 40 per cent stake in Air Seychelles and 2.987 per cent in Aer Lingus. The tie-up with Air France-KLM marks the 40th code share agreement for Etihad.

“This is a long road, what’s important to us is that these businesses are viable in their own right,” James Hogan, chief executive of Etihad said in a telephone interview today to announce the company’s third-quarter results.
The revenue contribution of code shares and partnerships jumped to $182m in the third quarter, a 51 per cent increase from a year ago, Etihad said on Sunday. It reported third quarter revenues of $1.3bn, a rise of 19 per cent from the same quarter last year, as passenger numbers increased to 2.79m.

The airline is considering seeking permission from the Australian authorities to increase its stake in Virgin Australia to above 10 per cent, Mr Hogan added. “It’s just a matter timing,” Mr Hogan said. “What we don’t want to see is people expecting us to rush in.”
Etihad’s Australia push puts the airline in direct competition with Emirates, the airline based in neighbouring Dubai.
Just last month Emirates unveiled a 10-year partnership with Qantas in a bid to dominate long-haul flights. Emirates’ Dubai hub is set to replace Singapore as the stopover airport for the Australian carrier’s European flights