Etihad Airways (EY) will have a significant hand in the management of Air Berlin (AB), in which it is the largest single shareholder following an increase in its holding to 29.21% late last year (ATW Daily News, Dec. 20, 2011).

EY president and CEO James Hogan, who will serve as vice chairman of AB's board, said the Abu Dhabi-based airline had "in fact been tracking Air Berlin for some time" and decided to make a strategic play to gain a foothold in Germany and surrounding markets, where EY's reach had been minimal.

"We took the industry by surprise, but most commentators think [taking such a large stake in AB] was a smart move," Hogan said during a visit to Washington to announce EY's planned new Abu Dhabi-Washington Dulles service (ATW Daily News, Feb. 24).

He said Boeing 787 operations for both carriers will be jointly managed as part of a network integration plan that will extend both airlines' reach. AB, for example, is now operating flights to Abu Dhabi, he said.

Hogan acknowledged that AB has had trouble earning positive net income (ATW Daily News, May 13, 2011). "As we move to profitability, we think they'll move to profitability as well," he said. EY earned its first-ever annual profit in 2011 (ATW Daily News, Feb. 14).

Photo: Etihad president and CEO James Hogan