Malaysia Airlines, Etihad eye partnership

JAMIE FREED
Last updated 08:59 18/06/2014
Malaysia Airlines
Reuters

TROUBLED AIRLINE: Government-controlled Malaysia Airlines reported a US$134 million first-quarter loss.

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Troubled carrier Malaysia Airlines has informed oneworld alliance members that it might form a partnership with Etihad Airways, says CAPA Centre for Aviation.

The report follows speculation at the International Air Transport Association annual meeting in Doha, Qatar this month that talks between Malaysia Airlines and Etihad were underway, including the possibility of an equity investment by the Abu Dhabi carrier.

At the time, Etihad chief executive James Hogan told Fairfax Media that such speculation was unfounded and that his airline was focused on completing a deal to buy a 49 per cent stake in lossmaking Italian carrier Alitalia.

CAPA said Malaysia Airlines would initially form a comprehensive codeshare partnership with Etihad, building on limited codesharing which is already in place.

"But with Etihad, an equity stake is also always a possibility," the Sydney-based aviation consultancy said. "What will unfold in Malaysia over the next several months is hard to predict. Etihad may ultimately not be interested in investing in Malaysia Airlines, particularly if the government is reluctant to relinquish control or allow the deep restructuring the carrier will need to be viable over the long term."

Etihad owns minority stakes in several airlines, including Virgin Australia Holdings. But a relationship with Malaysia Airlines could bolster Etihad's position in Australia significantly given the loss-making Malaysian carrier is one of the largest international airlines in the local market.

Malaysia Airlines was already unprofitable before the disappearance of MH370 in March but its financial position has since worsened, with the government-controlled carrier reporting a $US134 million first-quarter loss. It is offering Australian travel agents an extra 3 per cent commission on ticket sales before June 30.

Malaysia Airlines is a member of the oneworld alliance, having been sponsored by Qantas Airways when the pair were in talks about forming a premium joint venture in Asia. However, relations between the carriers soured after Qantas signed a comprehensive partnership deal with Emirates.

Etihad is not a member of any alliance but it holds a minority stake in airberlin, which has retained its position in oneworld despite the investment from Etihad.

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- Sydney Morning Herald

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