LDN - Business

Emirates willing to cooperate with rival UAE airline Etihad

[October 11, 2017] By Jamie Freed

SINGAPORE (Reuters) - Emirates [EMIRA.UL] is open to cooperation with rival Etihad Airways in areas including procurement, its president Tim Clark said on Wednesday, adding a full merger between the pair was unlikely but up to the owners.

Based in the United Arab Emirates, Emirates and Etihad have competed to build global networks from their respective hubs in Dubai and Abu Dhabi, even as they battled overcapacity, security concerns and a fall in regional business travel.

"I think there is value to be had working more closely with them," Clark told Reuters by phone, adding there might be concerns from regulators in some foreign markets.

"There are many areas that the airlines could work together on like procurement. But we have to go the first jump first to understand what it is we could do and I'm simply the manager of one of the businesses," he said.

"It is my superiors who have to make that call, not me."

When asked if the pair could pursue a merger along the lines of Europe's Air France and KLM, Clark said: "I don't think that will be the case but it is not my call, really. It is whatever (the shareholders) may do in the future."

Emirates is owned by the Dubai government while Etihad is owned by the Abu Dhabi government.

Etihad, which has been hit by loss-making investments in Air Berlin <AB1.DE> and Italy's Alitalia [CAITLA.UL], said in response to Clark's remarks that it was common for airlines to leverage in-country expertise and economies of scale.

"We constantly seek opportunities for innovative collaboration with other organisations, where it makes business and commercial sense," an Etihad spokesman said in an emailed statement.

Last month, Etihad announced it would appoint Tony Douglas, former boss of Abu Dhabi's airport and London's Heathrow, as its CEO from January as it rethinks its expansion strategy.

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Sir Tim Clark, President of Emirates Airlines speaks at the 2016 International Air Transport Association (IATA) Annual General Meeting (AGM) and World Air Transport Summit in Dublin, Ireland June 2, 2016. REUTERS/Clodagh Kilcoyne

EMIRATES ORDER PLANS

Emirates, a bigger airline than Etihad, is the largest customer for the Airbus SE <AIR.PA> A380, a plane facing slowing production rates due to a lack of sales.

Clark said an order for more was under consideration, adding that any A380 order would help replace 25 A380s due to be retired in the mid-2020s.

He did not give any details on the likely volume of any order or whether a deal would be signed at the Dubai Airshow next month.

"Airbus would love us to do that but we've got a few things to sort out first so I'm not sure that we’ll get there for the airshow," he said.

The airline is separately looking at the Airbus A350 and the Boeing Co <BA.N> 787 to meet its needs in the 250-300 seat market, Clark said. Last month he told Aviation Week magazine that a planned order was "off the table for now".

In 2014, Emirates canceled an order for 70 A350s.

Clark said Emirates' procurement and operational groups were engaging with both manufacturers about potential orders.

"I don't want to focus on the Dubai Airshow," he said of the timing. "The important thing is to get the right deal for the company at the time that suits us, not driven by a guillotine of the middle of November."

(Reporting by Jamie Freed; editing by Himani Sarkar and Jason Neely)

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