Aer Lingus and Etihad Airways agree partnership

AER LINGUS and Abu Dhabi-based Etihad Airways have agreed a commercial partnership that will involve them feeding traffic into each other’s networks and sharing revenues from those passengers.

The code-sharing deal, which has been in negotiation for more than three months, is due to be announced today.

Etihad is likely to feed passengers from its hub in Abu Dhabi into Aer Lingus’s transatlantic services from Dublin to the United States.

Etihad currently flies from Abu Dhabi to Dublin 10 times a week and will put it’s code on about 20 Aer Lingus flights initially, primarily transatlantic services.

Aer Lingus’s code will also appear on Etihad flights.

This will be Etihad’s 36th code-sharing agreement. Aer Lingus also operates a number of code-sharing deals, including with British Airways and US carriers United and JetBlue.

The partnership is another signal of Etihad’s desire to forge a closer strategic relationship with Aer Lingus, having acquired a 2.98 per cent stake in the Irish airline in April.

It will also be seen as an endorsement by Etihad of the strategy being pursued by Aer Lingus’s senior executives, led by Christoph Mueller.

It could also be a precursor to Etihad increasing its stake in Aer Lingus.

In an interview with industry publication ATW in London last Friday, Etihad chief executive James Hogan reiterated its interest in acquiring the Government’s 25 per cent stake in Aer Lingus, which it is planning to sell.

“We’ve always said that when the Irish Government divests we’re very keen to look at it but they’ve not approached us on that,” Mr Hogan said. “Until that’s timetabled I can’t say any more.”

Aer Lingus is the subject of a €1.30-a-share bid from Ryanair, which owns 29.8 per cent of it’s Irish rival.

This offer is dependent on clearance by European Commission competition regulators, given the dominance of Aer Lingus and Ryanair in Ireland.

Under EU rules, Etihad, as a non-EU airline, cannot own a majority share of Aer Lingus but it could exert influence over its strategy by holding a large stake in the business.

Etihad also holds strategic stakes in Air Berlin, Air Seychelles and Virgin Australia. Mr Hogan said these are already yielding benefits for those airlines.

For example, Etihad’s 29 per cent stake in Air Berlin had enabled the German carrier to find about €100 million of economies through measures such as using Etihad for training on its forthcoming fleet of Boeing 787s rather than investing in its own simulators.

Similarly, it has undertaken certain planning and training functions for Air Seychelles.

Mr Hogan sees this pattern as the way forward for many carriers: “The challenge for small airlines is that they can’t afford overheads. We’ve proven with Air Seychelles that it can be a profitable operating unit and we would absorb the overheads that a small airline, moving forward, just can’t maintain.”