ADQ to fold Etihad support services into its new aviation holding company

Airline will also divest two units to Adnec

The businesses that will be transferred to the new platform include Etihad Airport Services Cargo, Etihad Engineering, Etihad Airport Services Ground, Etihad Aviation Training, Etihad Secure LogisticsShow more

Abu Dhabi’s holding company ADQ unveiled plans for a new aviation company that will integrate several Etihad Airways support services, a move that will support the national flag carrier’s ongoing transformation.

The businesses that will be transferred to the new platform include Etihad Engineering, Etihad Airport Services Cargo, Etihad Airport Services Ground, Etihad Aviation Training, Etihad Secure Logistics and Etihad Technical Training, the two companies said on Thursday.

Once the transaction is complete, the airline support services businesses will benefit from being part of ADQ’s mobility and logistics portfolio, which includes Abu Dhabi Airports and AD Ports Group.

Additionally, under the proposed transaction two Etihad businesses will become part of events organisation Abu Dhabi National Exhibition Company (Adnec). Etihad Airport Services Catering will combine with Adnec’s catering business Capital Hospitality, while Etihad Holidays will join Adnec’s tourism promotion business, Tourism 365.

“With the proposed addition of Etihad’s experienced aviation support businesses to our new dedicated aviation company, ADQ is primed to develop an integrated aviation platform that is driven by performance and a robust financial foundation through its new company,” Mohamed Alsuwaidi, chief executive of ADQ, said.

“With an integrated mobility and logistics portfolio that plays a leading role in the development of Abu Dhabi’s global connectivity, we are well-positioned to unlock the growth potential of these aviation services businesses. We see potential to capitalise on growth opportunities, attract a wider client base of airlines and drive the future expansion of Abu Dhabi’s aviation sector.”

The proposed transaction is subject to customary closing conditions, including regulatory approvals. The terms of the transaction were not disclosed.

“The past two years have changed the face of aviation and the proposed agreement marks a significant milestone in how we are repositioning Etihad Airways and our subsidiaries for long-term success,” said Tony Douglas, group chief executive of Etihad Aviation Group.

“This agreement will allow us to place 100 per cent of our focus on Etihad Airways to capitalise on recovering travel demand.”

The aviation industry faced the worst crisis in its history last year as the Covid-19 pandemic crushed travel demand and upended the tourism industry. The health crisis severely disrupted passenger operations globally, forcing cash-strapped airlines to ground aircraft and cut jobs or furlough staff.

Etihad revamped its organisational structure last year to position itself as a mid-sized, full-service carrier, concentrating on its fleet of widebody aircraft. Etihad’s leaner, flatter and scalable organisational structure will support organic growth as the world returns to flying, the airline said.

The proposed agreement is the start of a new chapter for Etihad Airways, allowing the airline to further sharpen focus on its core business and respond with greater agility to market opportunities as global travel demand rebounds from Covid-19, according to the statement.

“The inclusion of Etihad Airport Services Catering and Etihad Holidays supports Abu Dhabi's strategy, which aims to achieve integration between various business units across exciting economic sectors,” Humaid Al Dhaheri, managing director and group chief executive of Adnec said.

“This move will us to go above and beyond the customers’ expectations by building on what has been done already. Our focus remains on achieving milestones and continuing to work to enhance competitiveness at the regional and international levels, enable as well as increase contributions to the economy of Abu Dhabi and support sustainable development.”

The businesses joining ADQ’s new aviation company and Adnec will remain key long-term strategic partners to Etihad Airways, the statement added.

Etihad Airways halved its first-half loss for 2021 on the back of a healthy cargo business. The Abu Dhabi airline, which announced its half-yearly financial results on August 10, said a reduction in costs and an expansion of its network and cargo business helped it to reduce losses despite Covid-19 variants hampering a recovery of global air travel.

The airline’s cargo revenue rose 56 per cent year on year in the first half of 2021 to $800 million as it carried 365.5 tonnes of freight, an increase of 44 per cent from the same period a year ago, the airline said.

Set up in 2018, ADQ has a portfolio of companies in strategic sectors of Abu Dhabi’s non-oil economy, including tourism and hospitality, aviation, transport, logistics, industrial, property, media, health care, agriculture and food and financial services.

ADQ’s portfolio of companies includes the Abu Dhabi Power Corporation, Abu Dhabi Airports, Abu Dhabi Ports, Etihad Rail, healthcare provider Seha, insurer Daman, Abu Dhabi National Exhibitions Company and media companies Abu Dhabi Media and twofour54.