The Middle East’s once fast-expanding airlines are coming under pressure

By The Economist online

LAST April, Etihad Airways, the flag-carrier of the emirate of Abu Dhabi, claimed that 2015 had been its fifth consecutive year in the black, with net profits of $103m. James Hogan, the firm’s chief executive, hailed the result as proof that Etihad is a “sustainably profitable airline”. Yet less than one year on, both Mr Hogan and his chief financial officer, James Rigney, have been eased out amid a “company-wide strategic review” to “improve cost efficiency, productivity and revenue”; reforms ill-befitting a healthy business. Just across the sand, Emirates, the flag-carrier of Dubai, has deferred orders for 12 double-decker Airbus A380s in response to a 75% drop in profits. Qatar Airways, the region’s other super-connector airline, has abandoned plans for a subsidiary in Saudi Arabia. After years of uninterrupted and speedy growth, the Gulf carriers are hitting turbulence.

Taken in isolation, falling profits and waning sales should be of no great concern to these industry goliaths. Low oil prices and jitters about terrorism may have sapped demand for business and leisure travel—particularly in their neighbourhood—but overall the global economy is holding up…

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Category: Business and finance, Gulliver

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