While most CEOs would be apprehensive of investing in a poorly performing airline, James Hogan, Etihad Airways’ president and chief executive officer, shares a different perspective.
James Hogan sees his company’s 560 million investment in Alitalia as a way of making progress, rather than having a threat. Looking at the bigger picture, the CEO states that the aviation industry must not be restricted in making just local deals, but also should spread their wings to lend a hand to global companies as well, since in doing so, there will be an efficient, healthy, and competitive business environment. Now, with their link to Alitalia, Etihad Airways aims to energize and boost the confidence of not only the aviation industry of Europe, but also its employment sector and economy.
In the agreement between the two prominent airlines, Etihad receives shareholder loans to look after Alitalia’s urgent financial disputes, the leaseback of and acquisition from five various pairs of departure and arrival slots at Heathrow Airport, a 49% equity stake in Alitalia, as well as a whopping 75% stake in Millemiglia, the loyalty plan of the struggling airline.
Keeping their need to see a return on their investment in mind, Etihad created a three-year agenda when they stepped in to help Alitalia regain its brand name. According to this outline, the first year would be centered on reducing losses; the second year would be aimed at achieving break even, while the last and third year would be aimed at witnessing profits. The most noteworthy priorities of Etihad in helping the struggling company, are to stabilize it in terms of finances and also to reduce its costs. In doing so, Etihad, along with their partners at Alitalia, have decreased the short-haul fleets to make use of the aircrafts as much as possible, redesign their schedules and networks, as well as seek proficient ways to run the airline. Both these airlines now own networks in Abu Dhabi and they also share codeshare deals with one another. This collaboration with Alitalia was a rather daring move on Etihad’s part, seeing as none of the other companies wanted to invest in the carrier. Now, with this incredible partnership between the two airlines, Hogan is particularly hopeful about Alitalia’s profitable future.