Australian-born aviation executive James Hogan will depart Etihad Aviation Group, the parent company of Virgin Australia shareholder and alliance partner Etihad Airways, in 2017 as the Gulf carrier battles difficult market conditions.
Etihad Aviation Group said in a statement on Tuesday afternoon Hogan would step down as president and chief executive in the second half 2017. Chief financial officer James Rigney is also leaving the company at the same time.
Hogan was chief executive of Etihad Airways between 2006-2016, before stepping away from the day-to-day stewardship of the airline in May 2016 to spearhead the wider Etihad Aviation Group following a corporate restructure.
The leadership change comes at a tricky time for not just Etihad but all the Gulf-based carriers, given the slowdown in the region amid difficult trading conditions and overcapacity.
It was reported in December 2016 Etihad, and Emirates, were reducing staff numbers and cutting costs.
Meanwhile, Etihad’s minority shareholdings in overseas carriers such as Europe’s airberlin and Alitalia, as well as Virgin Australia, were yet to offer a return on their investments, with the two European carriers in particular mired in deep losses.
Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said it was a “challenging market”.
However, he described Etihad, with its airline, cargo, engineering, frequent flyer and ground handling services operations, as a “great business with strong fundamentals”.
“The board and management team will continue an ongoing, company-wide strategic review,” Al Mazrouei said in a statement.
“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.”
There have been signs in recent times Etihad was looking at new ways to improve it financial position. The airline signed a codeshare agreement with German flag carrier Lufthansa, which although small in scope to begin with, had the potential to grow into something bigger.
Separately, it also announced plans to establish a new European leisure airline as part of a joint venture with TUI AG.
There were also efforts to turn things around at at airberlin (through leasing aircraft to a Lufthansa subsidiary) and Alitalia (which is undergoing yet another restructure).
Also, a new chief executive could herald a change in approach to Etihad’s foreign airline investments acquired during Hogan’s tenure, which apart from airberlin, Alitalia and Virgin Australia also included India’s Jet Airways, Air Seychelles, Air Serbia and Swiss-based Etihad Regional.
Etihad Aviation Group said in a statement Hogan and Rigney would join an (unnamed) investment company after leaving the airline group. A global search for a new group chief executive and group chief financial officer was underway.
Al Mazrouei said the aviation group had a “deeply experienced aviation and airline management team” and paid tribute to Hogan’s leadership over the past decade, where Etihad Airways has grown its fleet from 22 to 120 aircraft.
The airline has also set a benchmark for premium travel, particularly for the three-room “The Residence” on board its Airbus A380s.
“We are very grateful to James,” Al Mazrouei said.
“It is a business which has set new benchmarks for service and innovation. Under his leadership, the company has provided new opportunities for thousands of Emiratis and has been a critical element in the remarkable progress of Abu Dhabi and the UAE. We look forward to James’ continued association with Abu Dhabi in new ways.”
Hogan, whose departure from Etihad was flagged in a series of media reports at the end of 2016, said he was proud of what had been achieved during his time at the helm.
“Along with the board and my 26,000 colleagues, I am very proud of what we have built together at Etihad and of the company’s substantial contribution to the UAE and to the development of Abu Dhabi,” Hogan said in the statement.
“The last decade has seen incredible results but this only represents a first chapter in the story of Etihad.”
Etihad serves Brisbane, Melbourne, Perth and Sydney from its Abu Dhabi hub.