Etihad rethinks on its strategy after Alitalia fail

Published on : Friday, May 12, 2017

Etihad-AirwaysWhile naming its new boss, Etihad Airways provides the Gulf carrier with a chance to reorganize its insistent strategy on expansion, especially after the failure of minority-owned Alitalia that highlighted the major obstacles to global growth. This week, Ray Gammell was appointed as the interim CEO. These happened days after Alitalia required for bankruptcy protection with $3.3 billion of debt. Ray replaces experienced person and previous boss James Hogan. To buy minority stakes in myriad airlines was the main strategy of Hogan. However, the struggles are symbolic of a quandary peculiar to the industry.

 
Gaining access to the rivals’ routes often remains the path to success and growth for airlines. So far in the European Union, foreigners are not allowed majorly to own an airline. At Alitalia, the lack of full control meant that Etihad could not deal effectively with labour problems. Since 2011, Abu Dhabi state-owned Etihad has exhausted billions of dollars buying minority stakes from Europe to Australia as it contests to get a hold with regional rivals Emirates and Qatar Airways.

 
Alitalia was Etihad’s eighth and one of the most high-profile bet. But the 560-million-euro ($609 million) investment lies disoriented, placing Hogan’s wider strategy under scrutiny, after staff overwhelmingly rejected its latest restructuring plans.

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