Talk of deal with SAA shot down by Etihad

20 December 2014 - 20:42 By Asha Speckman
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Air routes are one of the first things that Etihad Airways CEO James Hogan aims to fix in the struggling airlines his company has been buying stakes in.

But it appears he will not be achieving this as an equity holder in South African Airways (SAA) in the near future. On Thursday, Hogan denied that Etihad was in talks to buy a 20% stake in ailing SAA, adding to confusion over the recent announcement by SAA acting CEO Nico Bezuidenhout that Etihad would become a potential strategic shareholder.

"We're not in talks to have an equity stake in SAA. We never have been. What we have been in talks about is to have a partnership agreement," Hogan said in Dubai, where his company was launching its luxurious new Airbus A380, complete with private apartments, butlers and an on-board chef.

Etihad, the national airline of the United Arab Emirates and one of the world's fastest growing airlines, has recently bought stakes in Air Seychelles and Italy's Alitalia, among others.

But how could Bezuidenhout have incorrectly named Etihad as a potential shareholder?

"You have to ask them that," Hogan said tersely. "We haven't been approached. I haven't modelled it. I haven't looked at it."

A source said that talks are under way between the two airlines, although the announcement that Etihad was buying a stake in SAA was premature.

Hein Kaiser, a spokesman for Bezuidenhout, said: "The speculation about an Etihad offer or any notion of a transaction is the product of speculation and nothing more."

He said that at an SAA media briefing last week, Bezuidenhout responded to a question about strategic equity partners. Asked whether Etihad had expressed interest, "he did, in response to a media question, say that Etihad is known for its strategy of acquiring small stakes in other airlines", said Kaiser.

Hogan, asked what he considered to be strengths and weaknesses at SAA, said he had not analysed SAA but believed it had a strong brand and strong presence in Africa.

A week ago, Bezuidenhout announced that SAA would be operating a daily flight between Johannesburg and Abu Dhabi, Etihad's home base, from March 29 next year. The enhanced partnership also included closer integration of the Etihad Guest and SAA Voyager frequent flyer programmes.

The regulator has yet to approve the placing of the relevant code on the new SAA flights to Abu Dhabi. SAA will also place its SA code on 32 Etihad routes beyond Abu Dhabi.

A plan to scrap SAA's direct flight to London and route traffic through the Etihad Abu Dhabi hub is proposed - in a confidential document recently obtained by Bloomberg - as one leg of a turnaround strategy to save R1.3-billion in costs for SAA.

Another indication of a possible closer relationship with SAA is that the parties are exploring joint sales and marketing programmes and the co-ordination of procurement, facilities and airport operations, according to the SAA announcement last week.

 

Meanwhile, Etihad Airways begins its first commercial flight of the Airbus A380 - complete with a residence in the sky - to London's Heathrow Airport two days after Christmas. But South Africans will not be among the first to experience the flight.

From March, a second A380 will operate on the London route and aircraft will later be deployed on the Sydney and New York routes, Hogan revealed at the official launch of their A380 and Boeing 737 aircraft in Abu Dhabi on Thursday.

The luxurious planes offer travellers the world's first three-room suite in the sky, including a living room fitted with a reclining lounge chair and ottoman which can be expanded into a two-metre-long single flat bed, a separate en-suite shower room, bedroom, in-flight chef and a butler. The 11 square metre prime space on the upper deck is for single or double occupancy.

Anticipation of The Residence was so great that by early November the first 10 flights were already sold out, according to a Bloomberg report last month. The cost from Abu Dhabi to London is about $20000 (about R234000). In comparison, hiring a private jet to London costs between $100 000 and $160 000.

Andrew Ward, Etihad's vice president for marketing, said the company hoped to attract ultrahigh net worth individuals who have been flying in private jets. "They would get better in-flight service than they'd get on a private jet," Ward said.

Asha Speckman attended the event as a guest of Etihad Airways

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