DUBAI: After a decade of holding fort, James Hogan will step down from his position as the President and Chief Executive Officer of Etihad Airways in the second half of 2017, the Etihad Aviation Group Board of Directors announced on Tuesday in a statement.
The move comes as the Abu Dhabi carrier continues to suffer massive losses from its investments in European airlines Air Berlin and Alitalia.
Hogan led Etihad’s expansion into Europe, buying a 29-per cent stake in Air Berlin in 2011, followed by Air Serbia stake in 2013 and a 49-per cent stake in Alitalia shortly after. Etihad’s losses in Europe were led by Air Berlin alone having been €477 million in the red in 2015.
A company-wide strategic review is next on cards for the airline, according to Mohammad Mubarak Fadhel Al Mazroui, Chairman of the Board of the Etihad Aviation Group. “We must ensure that the airline is the right size and the right shape,” he said in a statement. “We must progress and adjust our airline equity partnerships even as we remain committed to the strategy.”
Along with Hogan, the company’s chief financial officer, James Rigney, would be stepping down too later this year. Etihad said that Hogan will join an investment company along with Rigney, adding that a global search for a new Group CEO and a new Group CFO is already underway.
“His successor will have a few issues to address, including trying to make sense of, and to tidy up, the various investments they have, but a volte face will be difficult, at least in the short term,” says Andrew Charlton, managing director of Geneva-based Aviation Advocacy.
He was though quick to add that Hogan can take a lot of credit for putting Etihad on the global map.
Echoing his view is John Strickland, aviation expert and director of UK-based JLS Consulting. “Under James Hogan Etihad has placed itself firmly on the aviation map and established a reputation for service excellence.
“The strategy of establishing minority equity stakes has successfully accelerated the airline’s growth. However, it has also brought challenges with Air Berlin and Alitalia incurring heavy losses. It seems probable that the growth strategy will be reviewed and modified by his successor,” he told Gulf News. While some industry talks suggest that Hogan’s European investment strategy could have led to his departure, Addison Schonland, Partner at US-based AirInsight differs. “I don’t think we can blame him [Hogan] for this - these airlines have had problems long before Etihad took a stake. The strategy itself was a masterstroke - it provided Etihad EU-wide access as well as instant feed. Since the long term impact of the strategy is still playing out, it is still too soon to be critical,” he told Gulf News.
Owning stakes in seven airlines globally – Alitalia, Air Berlin, Air Serbia, Air Seychelles, Virgin Australia, Etihad Regional in Switzerland and Jet Airways in India – Etihad has in the last 10 years grown from a 22-aircraft fleet to 120 aircraft (with another 178 on order) today flying to 112 destinations.