Sir Tim Clark, the mastermind behind mega-airline Emirates and the businesses longtime President has hinted the Dubai-based carrier could one day merge with Etihad Airways in neighbouring Abu Dhabi. Rumours of such a tie-up first surfaced in March, when Handelsblatt, a German business publication cited unnamed sources as saying the rulers of the two airlines had already started talks.
At the time neither Emirates or Etihad were willing to say much in response to the speculation, although in an interview with Bloomberg, Clark called the rumours “nonsense” – although he refused to make any further comment.
Now, however, it looks like Clark has somewhat changed his tune. Okay, admittedly, he hasn’t said Emirates and Etihad are going to merge. In fact, when asked his opinion about a joint business, Clark told a reporter from Reuters: “I don’t think that will be the case.”
But his overall tone is very different from the original response he gave in March. In fact, Clark is actually distancing himself from the decision making, saying in the same telephone interview: “It is my superiors who have to make that call, not me.”
Later on in the interview, Clark went even further to highlight the fact that he couldn’t say for certain whether a merger would or would not happen: “it is not my call, really. It is whatever (the Sheikhs) may do in the future.”
A full-blown merger is unlikely – But…
So Clark doesn’t think a full-blown merger will happen between Emirates and Etihad but he can’t say for certain. This from a man who effectively created Emirates in 1985 and has been the airline’s President since 2003. Clark, it seems, is now downplaying his role at Emirates and describing himself as “simply the manager” – but what does he think might happen between Emirates and Etihad?
Here, Sir Tim does have a vision for the future, explaining that he thinks “there is value to be had working more closely with them (Etihad).” He went on to say that he thought there were “many areas that the airlines could work together on,” giving joint procurement as just one example.
Of course, even that level of cooperation wouldn’t be without its problems. For starters, Clark envisages a lot of interest from competition authorities in certain countries should the two airline’s start working together.
Clarks comments most likely mean something
But here’s the thing – Clark isn’t the kind of person who makes off the cuff remarks without first thinking them through. He isn’t a flamboyant, verbose character like Akbar Al Baker of Qatar Airways or Michael O’Leary of Ryanair. When he says something, you can be sure he’s said it for a reason.
Take Clark’s constant warnings of the ‘threats’ Emirates had faced last year – that was to prepare the world for a steep decline in the airline’s profits. Then he started talking up the threat of low-cost airlines like Norwegian – timed just as Emirates embarked on a major cost-reduction programme.
So on this occasion, we can safely assume these new comments haven’t been made in haste and definitely mean something. The question, of course, is how much to read into them.
Will a joint venture be announced soon?
We’d agree with Clark that merging the two airline’s into one is unlikely – at least in the foreseeable future. The pure logistics of such a move would be mammoth for starters. Then there’s the fact these airline’s mean so much to the Sheikh’s who own them.
But at the moment, both Emirates and Etihad are largely chasing after the same customer and as a result, driving each other’s revenues down.
Don’t be surprised to see some form of joint venture announced some time soon – this will allow them to coordinate schedules, codeshare on certain routes, share profits and use the same staff and contractors. Expect significant cost reductions and possibly staff layoffs in the next couple of years.