Our favourite German business newspaper for rumours about Etihad Airways is at it again. And this time, Handelsblatt may be onto something. The publication is citing an unnamed Etihad source as claiming that disgraced CEO James Hogan will be replaced at the helm by aviation heavyweight Christophe Mueller.
You may remember that Handelsblatt was the same newspaper that first broke the news that Etihad and German flag carrier, Lufthansa, were in talks about a possible merger. Then came reports that the ruling families of Dubai and Abu Dhabi had met to discuss the joining together of Emirates and Etihad.
The Etihad/Lufthansa rumour turned out to be partially true – the two airlines have since announced a thawing of relations with a new codeshare agreement as well as catering and maintenance contracts between the two. In fact, there was recent talk that the carriers would be bolstering their fledgeling relationship by adding more flights to their codeshare agreement.
It was also Handelsblatt that first revealed Etihad boss, James Hogan, would be fired following the failure of his flagship foreign investment strategy. Things came to a head in January when Etihad was forced to pump more cash into Italian flag carrier, Alitalia and German discount carrier, Air Berlin following mounting losses at both airlines. Etihad holds a 49% and 29% stake in the respective carriers.
The 60-year-old Australian (main picture) has led Etihad Airways since 2006. He spearheaded the transformation of the business into a Skytrax awarded 5-star airline. It was also his plan to create Etihad’s very own airline alliance by buying equity stakes in foreign carriers – dubbed ‘Etihad Airways Partners’.
The programme involved taking stakes in seven airlines: Air Serbia, Air Seychelles, Air Berlin, Alitalia, Darwin Airline, Jet Airways and Virgin Australia.
Explaining his strategy during a speech at the Global Airfinance Conference in January, Hogan said: “Our investments had an immediate impact on the revenue side, delivering hundreds of millions of dollars in additional revenues and allowing us to fill our onward connecting flights. Those benefits have been replicated in all our minority investments in air berlin, Alitalia, Jet Airways, Virgin Australia, Air Serbia, Air Seychelles and Etihad Regional.”
But it hasn’t been a complete success story. Some of the investments have made serious losses and have required round after round of additional funding from Abu Dhabi. In January, Etihad confirmed that Hogan, along with Chief financial officer, James Rigney would be leaving the company in the second half of 2017.
In enters, Christophe Mueller, an industry heavyweight with considerable experience turning around failed airlines. Mueller was the man who rescued Irish airline Aer Lingus from the brink and more recently helped Mayalasia Airlines recover from near bankruptcy.
But following disagreements with Mayalasian officials last year, Mueller made the surprise decision to take on a new role as Chief Digital and Innovation Officer at the Dubai-based Emirates.
He joined Emirates in September last year with a mission to help Emirates through an unprecedented period of economic uncertainty. In December, we wrote of Mueller’s appointment: “Mueller is spearheading a campaign to cut costs and increase profit. Sources suggest that Mueller has set his sights on two significant areas – the bloat of middle management and cabin crew.”
Unfortunately, it doesn’t look like things have worked out so well for Mueller at Emirates either. He originally intended to cut middle management and significantly streamline operations at the airline. But he soon faced pushback from senior officials who feared that the Emirati employment programme would be seriously jeopardised by his actions.
Although some of his cost-cutting strategies have been implemented Mueller has since been sidelined at the government-owned airline. However, taking the helm of the UAE’s national airline may be a challenge that Mueller will be more than willing to take.
With inside knowledge from Emirates and his previous track record turning around the fortunes of troubled airlines his appointment could be a major coup for Etihad backers. An official announcement is believed to be made in the next few days. However, an Etihad Airways spokesperson has refused to comment on what the airline calls “speculation”.
Going from previous Handelsblatt stories, this report could well be based on at least some truth. The devil of course, will be in the detail.
