Etihad Airways boss who led acquisition strategy on way out

AP News
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Posted: Jan 24, 2017 6:36 AM
Etihad Airways boss who led acquisition strategy on way out

DUBAI, United Arab Emirates (AP) — Etihad Airways said Tuesday that the CEO of its parent company, who led an aggressive multi-year buying spree that saw the Mideast carrier snap up stakes in airlines from Europe to Australia, is leaving.

The Abu Dhabi-based airline gave no reason for James Hogan's departure other than to describe it as part of a transition process started by the board of directors and the Australian last year. No replacement was named.

The move follows speculation about Hogan's possible exit and questions about Etihad's ability to turn around struggling investment partners such as Air Berlin and Alitalia.

The equity stakes Hogan pursued help feed traffic into Etihad's system and expand its route network as it competes against larger Gulf rivals Emirates and Qatar Airways.

But they also leave Etihad exposed to the problems and financial losses dragging down the older carriers it is now partly responsible for.

"They have to consume some significant management time on these airlines," said airline analyst John Strickland of JLS Consulting.

Chairman Mohammed Fadhel al-Mazrouei said the company's immediate priority is to continue a company-wide strategic review, suggesting that more changes could be in the works for the government-owned airline.

"We must ensure that the airline is the right size and the right shape. We must continue to improve cost efficiency, productivity and revenue. We must progress and adjust our airline equity partnerships even as we remain committed to the strategy," al-Mazrouei said in a statement.

Strickland described Hogan as "the brains behind Etihad's development and rapid growth," as well as the acquisition strategy.

He said it was too soon to say whether Etihad might try to sell off stakes in foreign airlines once Hogan is gone.

"Now is probably the time to perhaps reflect on whether they want to have a less ambitious and more cautious future," Strickland said. "Caution is more likely to be the watchword of a new regime."

Etihad last year named longtime executive Peter Baumgartner as CEO of the airline itself as part of a wider restructuring, and named Hogan as president and CEO of the umbrella company Etihad Aviation Group. Hogan had previously served as CEO and president of the airline.

Hogan will leave in the second half of this year to join an unnamed investment company with Chief Financial Officer CFO James Rigney, who is also departing. Al-Mazrouei expressed hope that Hogan will have a "continued association with Abu Dhabi in new ways," without elaborating.

Hogan could not immediately be reached for comment. In a statement, he said he was proud of the airline he and more than 26,000 employees had built. He became the airline's CEO in 2006.

Etihad boasts 120 planes in its fleet and has 178 aircraft on order. It reported a profit of $103 million in 2015, the most recent annual results available.

Besides Air Berlin and Alitalia, it has stakes in Air Serbia, Air Seychelles, Swiss-based Etihad Regional, India's Jet Airways and Virgin Australia.

A search is ongoing for Hogan's replacement.

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Follow Adam Schreck on Twitter at www.twitter.com/adamschreck .