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The talks would see Emirates acquire the main airline business of Etihad. Photo: Reuters
The talks would see Emirates acquire the main airline business of Etihad. Photo: Reuters

Emirates plans Etihad takeover to create world’s largest airline

The airline operation would be bigger than that of American AirlinesGroup,which has a market value of $19.2 billion

Dubai/London: Persian Gulf airline Emirates is looking at taking over unprofitable neighbour Etihad, people familiar with the matter said, in a move that would create the world’s biggest carrier by passenger traffic. The talks, which are at a preliminary stage, would see Dubai-based Emirates acquire the main airline business of Abu Dhabi’s Etihad, which would keep its maintenance arm, according to the people, who asked not to be named because the matter is confidential.

The negotiations could yet fall through, they said.

Both airlines initially declined to comment, before later denying that any talks were underway. Were a transaction to go ahead the enlarged airline operation would be bigger than that of American Airlines Group Inc., which has a market value of $19.2 billion. Any deal would require the blessing of the rulers of the richest sheikhdoms in the UAE. For Abu Dhabi, which sits on 6% of global oil reserves, it would advance a drive to overhaul state-controlled entities as it adapts to lower crude prices.

The airlines have traditionally been arch rivals, with their hubs competing to attract the same transfer passengers making long-distance trips between Asia and the West.

Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum and president Tim Clark have previously played down speculation that the carriers might combine, Sheikh Ahmed saying in May that there have never been merger talks. Clark said in June that the question was one for shareholders, while adding that he saw nothing happening in the short-to-medium-term. A combination of the airlines would provide further evidence of the sheikdoms consolidating businesses to boost competitiveness. Etihad saw its own business come under pressure as a slide in the price of oil led to a drop in travel in crude-based economies. That contributed to a $1.52 billion loss in 2017, taking the 2-year deficit at the airline unit to almost $3.5 billion.

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