Etihad Airways’ James Hogan has been named chief executive of Etihad Aviation Group. Ravindranath K / The National
Etihad Airways’ James Hogan has been named chief executive of Etihad Aviation Group. Ravindranath K / The National

Etihad revamps corporate structure with Hogan named head of new umbrella company



Etihad Airways' James Hogan has been named chief executive of Etihad Aviation Group, an umbrella company created to contain Etihad's growing interests, the chairman Mohamed Al Mazrouei said on Sunday.

“This has been driven by the formation of new companies, including Etihad Airways Engin­eering, Etihad Global Cargo Management Company, the Global Loyalty Company, Hala Abu Dhabi, and Etihad Airport Services,” Mr Al Mazrouei said.

“The acquisition of minority equity stakes in Alitalia, airberlin, Air Serbia, Air Seychelles, Etihad Regional operated by Darwin Airline, Jet Airways and Virgin Australia, has also necessitated the need for a dedicated team to manage our shareholding, and the delivery of wide-ranging synergies that are beneficial to all parties,” he added.

Mr Hogan, who has been chief executive of Etihad for the past decade, will be chief executive of Etihad Aviation Group, an umbrella company formally established in 2014, that will oversee a number of new companies to reflect the growing diversity of Etihad’s activities.

Peter Baumgartner, who has been with the company since 2005, takes over as chief executive of the airline.

Bruno Matheu will be chief executive of Airline Equity Partners, which Mr Al Mazrouei said delivered US$1.4 billion in revenue and 5 million passengers to Etihad last year. Mr Matheu has been chief operating officer of this unit since 2014.

Jeff Wilkinson is named chief executive of Etihad Airways Engineering, which undertakes aircraft maintenance for Etihad as well as third party carriers.

Hala Group, the hospitality arm, has yet to name a chief executive.

“Etihad Airways is no longer a stand-alone business,” Mr Hogan said. “The new management structure will enable us to maximise opportunities for growth, revenue generation and cost control on a much bigger scale.”

Also on the Etihad Aviation Group executive management team will be James Rigney as chief financial officer, Kevin Knight as strategy and planning chief, Ray Gammell as chief of people and performance, and Robert Webb as chief of information and technology.

Etihad Aviation Group will have about 27,000 employees, with just over 20,000 working for Etihad Airways.

amcauley@thenational.ae

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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