Etihad puts Perth on hold for two years
Etihad also reiterated that it intends to increase its stake in Virgin Australia beyond its existing holding of 9 per cent, but highlighted that it would have to be "at the right time".
The chief executive, James Hogan, said he was bullish about the airline's prospects on routes to Australia, although it would be two years before it was likely to begin services to Perth from its base in Abu Dhabi.
"Australia is doing well for us . . . [and] we will continue to build on what we have," he said.
Etihad's next big order of new planes is not due to begin to arrive until the end of 2014.
The airline operates 25 flights a week to Australia, including twice daily to Sydney and daily to Melbourne. It also code-shares on three weekly Virgin Australia flights to Abu Dhabi.
Etihad highlighted the benefits from its alliances with airlines including Virgin and Air Berlin, as it reported a net profit of $US42 million ($40 million) in 2012, up from $14 million in 2011.
The airline has to reapply to Australia's Foreign Investment Review Board each time it wants to raise its stake in Virgin by another 5 percentage points. To date, Etihad has not reapplied for an increase in its holdings.
Singapore Airlines also has a 10 per cent stake in Virgin while Air New Zealand has a 20 per cent holding.
Frequently Asked Questions about this Article…
Etihad has said it will focus on bedding down its existing operations on routes to Australia over the next two years before expanding to Perth. CEO James Hogan said the airline is bullish about Australian routes but that services to Perth are unlikely to begin for about two years as the carrier consolidates its network.
Etihad operates 25 flights a week to Australia, including twice-daily services to Sydney and daily flights to Melbourne. The airline also code-shares on three weekly Virgin Australia flights to Abu Dhabi.
Etihad has said it intends to increase its stake in Virgin Australia beyond its current 9 per cent holding, but stressed any further investment would have to come "at the right time." To date, Etihad has not reapplied for an increase in its holding.
Under Australian rules, Etihad must reapply to the Foreign Investment Review Board (FIRB) each time it wants to raise its stake in Virgin Australia by another 5 percentage points. The article notes Etihad has not yet reapplied for an increase.
Etihad reported a net profit of US$42 million in 2012, up from US$14 million in 2011. For everyday investors, that improvement underlines that the airline’s alliances and network strategy were contributing positively to its results in that period.
Etihad highlighted benefits from its alliances with carriers such as Virgin and Air Berlin. The airline’s code-share arrangement with Virgin Australia (three weekly flights to Abu Dhabi) is an example of how partnerships extend Etihad’s network reach in Australia without immediately adding its own services.
The article notes Etihad’s next big order of new planes is not due to begin arriving until the end of 2014. While the airline said it will focus on consolidating its current Australian routes over the next two years, the fleet delivery schedule was mentioned as part of its broader expansion planning.
According to the article, Singapore Airlines holds a 10 per cent stake in Virgin Australia and Air New Zealand holds a 20 per cent stake. These existing shareholders are relevant background for investors watching any potential changes to Virgin’s ownership.
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