Etihad’s CEO Is Expected To Resign Within Three Months

All three of the Gulf carriers are under immense financial pressure from their respective governments to cut costs. For years the governments in the UAE and Qatar seemed to throw unlimited funds at their state-owned airlines, though that’s quickly changing.

Emirates-A380

In the past few weeks there have been rumors of layoffs at both Emirates and Etihad. Supposedly Emirates is in the process of firing their cabin crew recruiters, which should give you an idea of their hiring forecast.

Arguably Etihad is in a significantly worse financial situation, though. They’ve invested hundreds of millions of dollars in other airlines, including airberlin, Alitalia, Air Serbia, etc., and those investments aren’t paying off.

etihad-airways-partners

As a result, it’s interesting to note that Reuters is reporting that Etihad CEO James Hogan is expected to leave the company within a few months, and apparently there might be a big shakeup with Etihad’s investment strategy:

Dec 20 Abu Dhabi-based Etihad Airways is reviewing its strategy of investing in European airlines and is seeking an exit in a shake-up that could lead to the departure of CEO James Hogan, company and industry sources told Reuters on Tuesday.

Etihad saw a strategy to take equity stakes in carriers like Air Berlin, Alitalia and Air Serbia as a way to expand its European network but losses have mounted with Air Berlin and Alitalia failing to turn a profit.

Hogan’s expected departure, which could come within the next three months according to the sources, and the Etihad restructuring was first reported by German daily Handelsblatt, which cited several sources as saying Etihad wanted to start unwinding its European investments in January.

James Hogan has worked in the airline industry for most of his career, including at British Midland, Gulf Air, and Etihad. He has spent the past 15 years in the Middle East, having been CEO of Gulf Air for four years, and then CEO of Etihad for the balance of his time there.

Etihad-Business-Class-A340 - 4

Bottom line

Even as a passenger it’s not tough to see the financial pressure the Gulf carriers are under. Whether it’s Qatar Airways eliminating a la carte dining from their business class lounge or Krug from their first class lounge, or Etihad downgrading their catering, or Emirates now charging for seat assignments in economy on many fares, it’s clear that the Gulf carriers are under pressure.

If James Hogan does indeed leave within a few months, I’ll be very curious to see who is chosen to replace him. I almost have to wonder if Christoph Mueller might be interested in the job. He has been CEO of several airlines, including Aer Lingus and Malaysia, and recently moved to Dubai to work for Emirates, where he’s the “chief transformation officer.” Perhaps it’s too soon for him to accept such a job, though it also seems like it would be a logical fit for him.

Interesting times!

About lucky

Ben Schlappig (aka Lucky) is a travel consultant, blogger, and avid points collector. He travels about 400,000 miles a year, primarily using miles and points to fund his first class experiences. He chronicles his adventures, along with industry news, here at One Mile At A Time.

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Comments

  1. Mubadala and IPIC are merging due to pressure. Examining that should say enough about what is going on in Abu Dhabi. So it shouldn’t be a surprise that EY management is going to be made to pay a price too.

  2. ME3 aren’t j good airlines to fly anymore. No wonder the bloggers have been so keen to share the secrets of free travel in first class. They saw the end coming.

  3. They have investments in 7 airlines. How many of those have really paid off? The only that really looks to be doing well is Air Serbia. Maybe Jet Airways. Maybe. They’re on the right path to recovery. Every other airline is in serious trouble. airberlin is most likely going to be liquidated within the next few years. Has Alitalia ever made money for anyone? Virgin Australia is losing tons of money. Darwin Airline quickly expanded after the Etihad stake and then realized they were losing money and shrunk right back down.

    Hogan’s record speaks for itself.

  4. Hogan ran Ansett Australia and Gulf Air into the ground. and now Etihad is shaky. hooray. But whatever. He was hired because the govt of the UAE wanted a huge worldwide airline to help develop AUH’s economy. Fair enough. That works as long as you can pump money into it. Now that oil revenues have declined, doesnt work so much. Sure, you can always fill planes with $800 fares from the US to India or $400 fares from the EU to Bangkok, or $900 fares from Europe to Australia. But that doesnt and will never pay the bills, at least as long as the product is this fancy. It’s all bound to fall at some point, and looks like it is now.

  5. Wonderful news! Now we’ll experience the flight crew not wanting to work for the airline even more than before! Well that’s been my experience in J and Y!

    Why bother crew when you don’t wan to be nice Etibad?

  6. What did they expect when they were investing in failing regional airlines?? It takes a lot more than new seats and uniforms to turn an airline around.
    I wonder if John Borghetti (current CEO of VA) might put his hand up. He seems very fed up with having so many funding shareholders owning VA but he is quite good at transformations.

  7. Disappointed to hear of Etihad F catering going downhill, I was on them last January and will fly them Friday.

    For LAX-AUH, would you recommend eating my major meal in the LAX EY F lounge or on board?

    Thanks for the post!

  8. Hey Ben — Could you (or someone else) elaborate on how Etihad’s catering has been downgraded? Thanks!

    Todd

  9. @seattle Todd-
    I’ve flown EY many times over the last few years in F and J, both on flights to/ from the US and AUH, between EUrope and AUH , and between AUH and Asia. So I have a fair bit of experience. Some notable thiings:
    1) Brand degradation – everything from the water (they had used Acqua de Panna in F for example) to the ice cream has been shifted noticeably downward (local AUH water now on all flights for example).
    2) reduction in quanity – I flew EY JFK-AUH in F and AUH-LAX in F in January this year, and then in july flew DUS-AUH in J and AUH-IAD in F. The reduction was most notable in F. Previously, the menu simply had more variety – there were 3-4 different types of meat (steak/lamb/chicken and maybe something else) plus biryani (with lamb/steak/fish/veggie options), plus several other mains, plus several appetizers. Now, they’ve simply reduced the number of types of meat, reduced the number of sides, reduced the offereing of desserts, and reduced completely or simply eliminated the types of biryani. Similar reduction in quantity of J offerings across both snacks and meal options.
    3) reduction in quality: simply a noticeable difference in quality – not as high end as before
    This is all underlined by words from their CEO – several close friends/ associates work with the soon-to-be-departed CEO. Paraphrasing, of course, he has said that pax dont care about the soft product as much as the hard product. So budgets have been cut accordingly. And it’s noticeable.
    More broadly, the EY experience is largely inconsistent flight to flight. Sometimes it’s amazing, sometimes not. On my JFK-AUH F on the 380, the service was good, polished and customized. On AUH-LAX in F, it was excellent- the purser was French and her service was excellent. DUS-AUH was excellent service in J. AUH-IAD was a beautiful product on the 789 in F, but service was terrible – they forgot to bring drinks with meals – and just were not good. Period.
    Again, I’ve flown them a lot in premium cabins from early 2014 through now, and the decline in quality/quantity as well as service has been noticeable. When it’s good it can be really good. But too often it’s just mediocre.

  10. An unprofitable ‘prestige project’ airline taking minority stakes in other long-term unprofitable airlines – there’s no way anyone could have possibly predicted it wouldn’t be anything other than a stunning success.

  11. I wonder how that would affect what you call the “second-rate” gulf carriers. Kuwait is rebranding and opening a new airport, SAUDIA just added 5 new routes and is renewing its fleet and should have a new airport ready in 2017 and are talking about expanding even further in the next year or two.

    Not to mention Iran starting to open up and buying new aircraft after the sanctions were lifted.

    It’ll be very interesting to see how it all transpires.

  12. @Jason — Thanks so much for your reply and all the details. We’ve been really looking forward to flying Etihad F Apartment AUH-JFK in March of this coming year, and have been planning to put up with extra hassle (longer flying time and connections from JFK back home to SEA) in order to do so. Should I be worried that we’re not going to have the experience we’ve been expecting? Should we forego the chance to fly the A380 in F Apartment and fly a much more direct route home from Asia (e.g. HKG-ICN-SEA in Korean F vs. HKG-AUH in Etihad J, AUH-JFK in Etihad F A380, and then JFK-SEA on some dometic carrier)?

    Thanks,
    Todd

  13. @SeattleTodd-
    That’s a tough one to be sure. The A380 experience is unique due to the aircraft. It really is an amazing space. And the crews assigned to the A380 DO tend to be the cream of the crop, so to speak, so it’s usually pretty good. That said, the food experience would be the exact same menu as you’d get on any other EY longhaul F, regardless of plane. None of Lucky’s posts on EY reflect the downgraded F service. Mind you, it’s still good, and a good selection. It blows anything that UA/DL/AA offer out of the water. But it’s not what it was even a year ago. So that experience overall i think would be good. It is an impressive plane.
    Now, HKG-AUH is iffier. that’s an A330 route, and oftentimes they put the Air Seychelles A330 on that route. That J product on the Air Seychelles A330 is DECIDEDLY inferior. It’s a very old recliner seat, i cannot recall if it goes completely flat. Some days, though, it is the normal EY 330. if it’s the normal EY 330 then that’s fine. But service can be extremely inconsistent and the seats, while lie flat, tend to be narrow. I’ve had some great experiences in J on the 330, and some awful. Awful mainly because the service can be VERY slow or just mediocre. It all depends on the crew you have the day of departure. and the food will be nothing to write home about. Honestly, I’m at a bit of a loss for you. While the A380 is great and a great experience, that’s a very very long trip you’re planning. I wouldnt do it unless I was a SUPER aviation geek, otherwise I’d think HKG-ICN-SEA would be fabulous in Korean F. It’s a tough call. I’d just prepare to walk onto EY knowing that it could be really good or just mediocre, that the 380 will be a great hard product but questionable soft, that the transfer at AUH will not be fun (most definitely a bus gate for the arrival from HKG, then a long walk to the F lounge , then US pre clearance). If you were just going to New York I’d say EY absolutely. But since you’re going to Seattle, I’m a little more hesitant. That’s a long trip. Check out some of Lucky’s KE F trips and see what you think of them. Good luck!!
    Jason

  14. @jason — Thanks once again for the additional information! Does EY F on the A380 no longer have the “onboard chef” and what sounded like great flexibility in the selection and timing of the meals?

    Also, I’ve read that the F lounge in AUH is really special — would that not be a very positive part of the experience? We’ll have 3 hours between arriving from HKG and the departure to JFK.

    Finally, it looks like they’ve pulled the Air Seychelles aircraft for the flight from HKG-AUH, or at least they stopped specifying them in advance. They used to have them listed on specific days of the week, but now none of the HKG-AUH flights have the Air Seychelles aircraft specified. So I’ve been assuming we’d get the EY aircraft — does that seem right?

    Thanks again,
    Todd

  15. @Eugene

    VERY apt comment re: Swissair and the hunter strategy, absolutely spot on.

    One wonders if McKinsey has done work for EY as well.

  16. @SeattleTodd,
    Yes – the onboard chef is still a feature on all F class Etihad flights. There is all the flexibility you’ll want. I will caution this – if it is a full flight, service times can be lengthy in F if everybody wants to eat at the same time. If the chef and his crew are good, you wont notice it much. Sometimes service can drag. But overall, all F cabins on EY have a chef, and in general they tend to put the better ones on the 380. So that is a feature you will have.
    I have not been to the F lounge in AUH. It is supposed to be nice and would be a good part of the experience for sure. To be safe, you’ll have to leave the lounge probably 1.5/1.25 hours before your flight to JFK in order to go through the US pre clearance and US security. Just to be safe. Sometimes I’ve flown through that facility – and if you have Global Entry you will – other times it’s taken a long time. They seem to be better at processing people through there recently. I’d say an hour and fifteen minutes before your flight’s departure is close as you can cut it. Once you’re through the US CBP and security there’s a smaller lounge where you can wait before you board your flight. It’s nice, but not as nice as the F lounge pre USA departure area. So the lounge is good, but you wont have hours and hours to spend there. Maybe an hour and a half max once you’ve been bussed in and walked over to the lounge itself. Probably about a 10-15 minute walk from T1, which is where I assume your HKG flight will arrive (although I could be wrong). As far as HKG-AUH… if you’re not seeing it listed as Air Seychelles then you should be fine with the EY airplane. Although who knows – they could switch it in closer to departure. Not sure on that one. All I do know is that it WAS a feature every now and then for some time, and it was vastly inferior. So just keep that in mind. The EY 330 is fine enough if you get it. If you enjoy trying something new then by all means do the EY 380. The apartment is beautiful and it truly is a unique experience. So if you and your traveling companion are up for an adventure, then why not? Just go in with the right expectations and be ready for a long journey/ adventure.

  17. Thought I would dump my experience to here with my recent EY F return flight, since we are talking about the state of things with Etihad.

    Flew them this Nov JFK-AUH-MLE and the same way back. A380 hard product is great. Going to talk about food.

    1. AUH F lounge. Been twice there – on my way forward and then back. Once ordered Emirati Palace set menu. Other – ala carte with fish. Didn’t like both times at all. I would fire the chief to be honest. Desserts were way better than savory dishes. Spa/massage was sadistic. Overall – good lounge.

    2. JFK J/F lounge. Wasn’t impressed with the main dish – some beef. AUH-mock-cocktail – non-drinkable 🙂 Ice cream with dates – mostly ice. Overall is good lounge.

    In-flight food was the best. A380 F food was best of all, so one better save some space for it.
    3. In-flight A380 JFK-AUH. Biryani was excellent (but meat was more like curry, likely influenced by chief life experience :). Black cod was very good.
    4. In-flight A380 AUH-JFK. Different chief. Biryani was underwhelming (the chief looked more like never from byriany origin area :). Black cod was very good. Amuse-bouche was exceptional. Steak sandwich – excellent, likely specialty of the chief. Foie gras – cold.

    5. MLE-AUH J A330. Solid good food, not extra impressive. It doesn’t pretend to be of higher class, like food in the EY lounges only to not deliver later.

  18. @SeattleTodd.
    You said you will be flying from HKG and so I would definitely recommend you to fly on Korean Air or any Japanese airline in F Class. Consistently, all will be better than EY which may be rather inconsistent in service.
    Also, but if you were departing from Jakarta, which is not your case, I would recommend you Garuda First Class Jakarta.Amsterdam and then Amsterdam-Seattle in KLM Business (both Sky Team).
    Right now, I am up to book a ticket on First Class in GA JKT-AMS-JKT for just USD 3400 for February.
    Ben can definitely tell you more about how amazing GA First Class is.
    Just for your thoughts. Alejandro

  19. @ Eugene
    Exactly. Except that Etihad didn’t pay McKinsey & Co. tens of millions of dollars to cook up such a poor strategy.

    Does this mean that Air Berlin is the new Sabena?

  20. As many have already stated correctly: Hogan should have read the history books about the famous Swiss tragedy called Swissair and its “Hunter strategy CEO” – Philippe Brugisser. A flying bank, one of the worlds richest airlines, and suddenly, they made an announcement on an October day that they could not fly anymore due to financial issues. The debt burden was 15Billion CHF.
    It does not work to invest into minority holding into airlines which cannot be profitable or make the turnaround. Especially not in Europe, where there is a strong labour union network. I even doubt, whether with a well pre established exit strategy, damage can be averted, in most cases, the minority stakeholder will pump in loads of capital, absorb the losses and get itself into trouble. You pay and you shut up – in simple terms. Lets not forget: Alitalia was in mess and even AirFrance ran away, Air Berlin, former LTU, which was already in Swissair’s hands, struggled as a charter airline from the start. So what can we expect? Talking about AirBerlin, leads us to an interesting topic though: Lufthansa, in my view perhaps the best strategically managed airline, has bridged a major gap: by taking over AirBerlin planes, by entering into a codeshare, or perhaps even deeper venture with Etihad, they are getting one of the ME 3 on board. Lets keep in mind: the other two ME carriers, are close to One World, and Star Alliance has no assets in the Middle East. Turkish was a contender, but then again, this did not work out. QR is not only OW but also a stakeholder in IAG, EK is affiliated to OW in indirect terms, given their close cooperation with QF. So it perfectly makes sense for a major Star Alliance player to enter into cooperation with EY, it could lead to something interesting and successful, perhaps, also given that LH is domiciled in the EU, it gives LH the great chance of strategically positioning itself in order to get a stronger influence in other European airlines held in minority by EY, given that EY cannot hold any majority stakes in an EU airline. LH’s majority control of such airlines, which are not performing, could lead to major changes in the structure, eventually transform such airlines into profitable ventures, or be taken over totally by LH, which at the same time would eliminate competition.

  21. I don’t know where lucky saw Qatar Airways has canceled the Krug champagne as I recently flew with them and they offer the Krug champagne.

    It seems their lounges have even been rated 7 stars!

    Finally, as a frequent traveler, I noticed their quality standards keeps raising up with a customer service that remains unparalleled.

    I only fly with Qatar Airways for more than 10 years! I know what I talk about!

    I am not surprised also that their GCEO Mr Al Baker announced recently their profits with such products delivered to their customers I am not surprised Qatar Airways is in safe hand.

    I do recommend the airline for those who did not try yet!

  22. There is no more Krug in the Al Safwa lounge. They serve Taittinger. No more Krug in the 380 lounge. They serve what they serve in C class. No more a la carte dining in the Al Mourjan C class lounge in DOH. Thats what Ben meant. Have experienced it myself and it has been confirmed by staff.

  23. It’s sad to see the state of affairs. The major reason for the airline revenues taking a nose dive is the overheads.
    In the earlier days the industry hired all rounders and had a policy of cross training staff in various departments. Now the focus is shifted to specific fields resulting in increased manpower with much less delivered. Also the soul dependency on computer based hiring process leads to hiring professional with KEY WORDS rather then people with KEY EXPERIENCE. It may sound biased but the fact is a lot of real time deserving talent is NOT even looked at, since their resumes do not contain the key words and hence are filtered out by the Computer. It’s time the aviation industry learn to hire the right mix to reduce overheads.

  24. The only thing that surprises me is that this joker has lasted so long. He hasn’t got a clue what he is doing commercially as is evident from his track record and the “investments” he has made in various random loss-making airlines across Europe. What on earth was he thinking and how on earth did he persuade the board? The only thing this individual has going for him is his incredible blagging ability, his penchant for rebrands and his breathtaking ability to shower around his investors’ cash like confetti. He would make a good leader of the UK’s Labour Party!

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