Etihad CEO joins Virgin Australia board

20:33, Jan 19 2014

Etihad Airways chief executive James Hogan will personally take up the board seat on offer from Virgin Australia Holdings in a move that could increase the likelihood the heads of Air New Zealand and Singapore Airlines will follow suit.

The entry of experienced airline bosses onto the Virgin board, including Australian-born Hogan, will give them a say in the airline's strategy and place additional pressure on Qantas.

Qantas chief executive Alan Joyce in November accused Etihad, Air NZ and Singapore of "predatory behaviour" designed to damage his airline after the foreign carriers backed a A$350 million ($372m) capital raising by Virgin.

Hogan rejected the notion Etihad wasn't operating in a commercial manner. Virgin's register is dominated by Air NZ, Singapore Airlines, Etihad and Richard Branson's Virgin Group, which hold a combined 77 per cent stake.

"We happen to be owned by the state but we have a commercial mandate and we are structured accordingly," he told The Australian Financial Review.

"If I don't deliver the financial requirements of the business they will replace me. That is the environment all Abu Dhabi companies operate in. It is similar to Singapore because the Abu Dhabi model is the Singapore model."


Virgin extended board seats to representatives of all three of its major airline shareholders after the capital-raising but has not yet revealed whether they will be taken up by the chief executives of its partners, other top executives or independent nominees.

Hogan, in Zurich for the launch of Etihad's new regional European carrier, said he would join the Virgin board once chairman Neil Chatfield had finished putting in place proper rules of engagement and protocols for the airline's shareholder representatives.

"I will sit on the board," Hogan said.

"I am an Australian. I know the market. I've been in aviation since 1975. Maybe I can add some value."

Air New Zealand chief executive Christopher Luxon this month said he had yet to decide if he would take the Virgin seat or appoint another representative.

"It is a decision for us to make in our own capacity about what we will do with that invitation to join the board," he said.

"That is something we will think through in the next few months."

Singapore Airlines has not commented publicly on its plans.

The Virgin board is continuing to place pressure on Qantas in the ­domestic market following its recent capital raising.

Joyce was believed to be in Dubai last week meeting Tim Clark, the head of his key alliance partner, Emirates.

Hogan declined to comment on the situation at Qantas, which has a 49 per cent cap on foreign investment and has asked the Australian ­government for assistance in levelling the playing field with foreign-controlled Virgin.

"You would have to ask Alan Joyce [about Qantas]," Hogan said.

"We have all got our challenges in life."

Qantas once considered an alliance with Etihad, but instead decided on a deal with Emirates, which did not lead to any equity investment in the Australian carrier.

Joyce's visit to Dubai came as key Virgin partners Air New Zealand and Singapore Airlines on Thursday agreed to form an alliance to fly between New Zealand and Singapore.

Those airlines are regarded by analysts as potential partners for a future privatisation of Virgin, in a move that could risk marginalising Etihad.

Hogan said Etihad had a good relationship with Air New Zealand, which would not be affected by the new Singapore Airlines deal.

"We have had a code share for some time," he said.

"That is protected, grandfathered. [Etihad] won't fly to New Zealand. I meet that with both Virgin and Air NZ."

Hogan said he had no problem with Air New Zealand's alliance with Singapore Airlines if the Kiwi carrier felt that was the right move for that market.

"Does it impact our relationship with [Air New Zealand]?" he said.

"Not at all. Does it impact our relationship with Virgin Australia? Not at all. We have a 10-year commercial agreement. We also have in cargo a very strong partnership with Singapore Airlines."

Virgin offers customers the choice of using Etihad or Singapore Airlines on flights to Europe.

Etihad will this year ramp up its offering in Australia through the opening of a new lounge at Sydney Airport in May and the launch of daily flights to Perth from July 15.

The airline takes delivery of its first A380 in December and will eventually use this for Sydney and Melbourne flights. The A380 will have a different first and business class product.

The reporter travelled to Zurich as a guest of Etihad.