shevtheblue
Well-Known Member
Ethiad Airlines in trouble, Middle East in turmoil. The benefits on not being reliant on one benefactor emerge
By Tony Attwood
.
As we know Etihad Airways, one of the three Middle East carriers which set out to revolutionise global aviation business by buying their way into airports around the world, started laying off staff, last December. Manchester City FC whom Etihad bankroll didn’t blink.
It raised a couple of question marks at Untold, not least because we have often commented on the dangers of having a football club (or in Etihad’s case, three football clubs) somewhat dependent on the largess of a company whose commercial base is not that which is commonplace in the commercial world. Indeed our review of the top six clubs’ finances showed just how far Etihad had artificially inflated Man City’s income.
When the changes at the airline started, it was called a restructuring exercise to cut costs “against a backdrop of weakened global economic conditions”. The airline never said how many jobs were going, but spoke of “a measured reduction of headcount in some parts of the business.”
That was last December and by then the number of locations being flown to was declining.
In March this year the Economist magazine which tends to know a thing or two noted that although in April 2016 the airline claimed net profits of $103m, just one year on James Hogan, the firm’s chief executive, and his chief financial officer, James Rigney, have been set aside like an unwanted farmer’s field, in what the company called a “company-wide strategic review” to “improve cost efficiency, productivity and revenue”; which the Economist called “reforms ill-befitting a healthy business”.
Mind you, we mustn’t crow too much, as “Just across the sand, Emirates, the flag-carrier of Dubai, has deferred orders for 12 double-decker Airbus A380s in response to a 75% drop in profits. Qatar Airways, the region’s other super-connector airline, has abandoned plans for a subsidiary in Saudi Arabia. After years of uninterrupted and speedy growth, the Gulf carriers are hitting turbulence.”
Now the odd bump is neither here nor there. The three Gulf airlines of Emirates, Etihad and Qatar Airways survived the 2007-08 financial crisis, so surely they can deal with anything 2017 has to offer.
But Etihad went round doing something that seems a bit silly: buying up loss making airlines. Some made profits but Air Berlin and Alitalia made basket case level losses.
Sir Tim Clark, the president of Emirates, spoke of a “gathering storm” for the three airlines. Air Shuttle and AirAsia X are now undercutting Emirates, Etihad and Qatar with glee.
Then Delta Air Lines, American Airlines and United Airlines published evidence of “$42bn of government subsidies and “unfair” advantages”, and Donald Trump has taken notice and is lashing out in all directions. The EU is imposing duties on “foreign airlines that exploit subsidies for commercial advantage.”
So far so dodgy, but now we have The Financial Times weighing in with “Etihad strategy flies into difficulties” saying, “They’ve been hit by the loss of petrol revenue of their middle-east customer base pretty bad, and now the double whammy of the Trump travel ban and the no-carry-onboard-laptop/tablet rule are putting them in a bad spot.
And the killer blow… “In Dubai there is even talk of closing down Etihad.”
Arsenal, have no particular problem with the Emirates, because if they suddenly opted out of funding Arsenal, Arsenal could find someone else fairly quickly, as the naming rights fees are fairly mid-range for what might be expected. But the relation between Etihad and Manchester City is quite different. Etihad was set up by Royal Decree issued by Sheikh Khalifa bin Zayed Al Nahyan who is the half brother of Mansour bin Zayed bin Sultan bin Zayed bin Khalifa Al Nahyan who runs Manchester City.
So far so messy – but easy to write off as a little local difficulty soon to be overcome. Except…
Although the general election in the UK and the Terror has dominated the news, even at this inward looking moments there is some coverage of the chaos in Qatar as Saudi Arabia, the Emirates, Bahrain, Egpyt have stopped all dealings with Qatar, closed their embassies and closed all borders over what has been patently obvious for years – that Qatar is funding Islamist extremism by the $Billion.
And even though we are not hearing much in the UK, it is real big-time news in Europe. All Qataris have been given 14 days to get out of Saudi, Emirates Bahrain and Egypt. Qatar’s only land border is with Saudi Arabia, and that is shut. Which is unfortunate when 80% of its food comes in from outside.
But now Iran is stepping in to export food to its ally Qatar by sea. So now the protagonists are preparing to suspend Qatari banks. Retaliations are being prepared. This is not a cod war in the sand.
So how does this affect Manchester City, and its lookalike clubs around the world?
Basically the money pumped into Manchester City was part of a deal that involved Etihad promising to make Manchester Airport one of its hubs, and so bringing more jobs to Manchester. But with the airline in difficulty, and the disaster area that is Qatar now exploding, the entire airline project is looking like something that needs to be cut back – which is in fact what is happening. And with that happening the funding of the three football clubs looks like a bit of frippery which can no longer be afforded.
Which is where the difference between clubs like Man City and clubs like Arsenal are plain to see. Arsenal pay for projects like their youth training system and the development of their stadium from their own money. Manchester City has paid for these through gifts and loans from its owner as part of his desire to enhance the name of Etihad. Etihad is what matters, not Manchester City, New York City, Melbourne City, Yokohama F. Marinos, and Club Atlético Torque in Uruguay. If the airline losses continue and the battle over Qatar intensifies, with Iran seeing a chance to gain leverage in the area (and seeing Qatar as a way to revenge itself on the United States and Israel after the Stuxnet nuclear power station software virus episode) then the last thing anyone is going to be thinking about is financing football clubs.
Of course I am not saying Mansour bin Zayed bin Sultan bin Zayed bin Khalifa Al Nahyan will be plug pulling tomorrow, but as I mentioned it does stress the benefit to a club of being self-financing. You just never know when one of these internecine battles will flare up.
There is also the issue of the World Cup, as I mentioned in the last post. But I am sure such clear headed well-organised organisations like Fifa and the FA have this under control.
http://untold-arsenal.com/archives/62142
By Tony Attwood
.
As we know Etihad Airways, one of the three Middle East carriers which set out to revolutionise global aviation business by buying their way into airports around the world, started laying off staff, last December. Manchester City FC whom Etihad bankroll didn’t blink.
It raised a couple of question marks at Untold, not least because we have often commented on the dangers of having a football club (or in Etihad’s case, three football clubs) somewhat dependent on the largess of a company whose commercial base is not that which is commonplace in the commercial world. Indeed our review of the top six clubs’ finances showed just how far Etihad had artificially inflated Man City’s income.
When the changes at the airline started, it was called a restructuring exercise to cut costs “against a backdrop of weakened global economic conditions”. The airline never said how many jobs were going, but spoke of “a measured reduction of headcount in some parts of the business.”
That was last December and by then the number of locations being flown to was declining.
In March this year the Economist magazine which tends to know a thing or two noted that although in April 2016 the airline claimed net profits of $103m, just one year on James Hogan, the firm’s chief executive, and his chief financial officer, James Rigney, have been set aside like an unwanted farmer’s field, in what the company called a “company-wide strategic review” to “improve cost efficiency, productivity and revenue”; which the Economist called “reforms ill-befitting a healthy business”.
Mind you, we mustn’t crow too much, as “Just across the sand, Emirates, the flag-carrier of Dubai, has deferred orders for 12 double-decker Airbus A380s in response to a 75% drop in profits. Qatar Airways, the region’s other super-connector airline, has abandoned plans for a subsidiary in Saudi Arabia. After years of uninterrupted and speedy growth, the Gulf carriers are hitting turbulence.”
Now the odd bump is neither here nor there. The three Gulf airlines of Emirates, Etihad and Qatar Airways survived the 2007-08 financial crisis, so surely they can deal with anything 2017 has to offer.
But Etihad went round doing something that seems a bit silly: buying up loss making airlines. Some made profits but Air Berlin and Alitalia made basket case level losses.
Sir Tim Clark, the president of Emirates, spoke of a “gathering storm” for the three airlines. Air Shuttle and AirAsia X are now undercutting Emirates, Etihad and Qatar with glee.
Then Delta Air Lines, American Airlines and United Airlines published evidence of “$42bn of government subsidies and “unfair” advantages”, and Donald Trump has taken notice and is lashing out in all directions. The EU is imposing duties on “foreign airlines that exploit subsidies for commercial advantage.”
So far so dodgy, but now we have The Financial Times weighing in with “Etihad strategy flies into difficulties” saying, “They’ve been hit by the loss of petrol revenue of their middle-east customer base pretty bad, and now the double whammy of the Trump travel ban and the no-carry-onboard-laptop/tablet rule are putting them in a bad spot.
And the killer blow… “In Dubai there is even talk of closing down Etihad.”
Arsenal, have no particular problem with the Emirates, because if they suddenly opted out of funding Arsenal, Arsenal could find someone else fairly quickly, as the naming rights fees are fairly mid-range for what might be expected. But the relation between Etihad and Manchester City is quite different. Etihad was set up by Royal Decree issued by Sheikh Khalifa bin Zayed Al Nahyan who is the half brother of Mansour bin Zayed bin Sultan bin Zayed bin Khalifa Al Nahyan who runs Manchester City.
So far so messy – but easy to write off as a little local difficulty soon to be overcome. Except…
Although the general election in the UK and the Terror has dominated the news, even at this inward looking moments there is some coverage of the chaos in Qatar as Saudi Arabia, the Emirates, Bahrain, Egpyt have stopped all dealings with Qatar, closed their embassies and closed all borders over what has been patently obvious for years – that Qatar is funding Islamist extremism by the $Billion.
And even though we are not hearing much in the UK, it is real big-time news in Europe. All Qataris have been given 14 days to get out of Saudi, Emirates Bahrain and Egypt. Qatar’s only land border is with Saudi Arabia, and that is shut. Which is unfortunate when 80% of its food comes in from outside.
But now Iran is stepping in to export food to its ally Qatar by sea. So now the protagonists are preparing to suspend Qatari banks. Retaliations are being prepared. This is not a cod war in the sand.
So how does this affect Manchester City, and its lookalike clubs around the world?
Basically the money pumped into Manchester City was part of a deal that involved Etihad promising to make Manchester Airport one of its hubs, and so bringing more jobs to Manchester. But with the airline in difficulty, and the disaster area that is Qatar now exploding, the entire airline project is looking like something that needs to be cut back – which is in fact what is happening. And with that happening the funding of the three football clubs looks like a bit of frippery which can no longer be afforded.
Which is where the difference between clubs like Man City and clubs like Arsenal are plain to see. Arsenal pay for projects like their youth training system and the development of their stadium from their own money. Manchester City has paid for these through gifts and loans from its owner as part of his desire to enhance the name of Etihad. Etihad is what matters, not Manchester City, New York City, Melbourne City, Yokohama F. Marinos, and Club Atlético Torque in Uruguay. If the airline losses continue and the battle over Qatar intensifies, with Iran seeing a chance to gain leverage in the area (and seeing Qatar as a way to revenge itself on the United States and Israel after the Stuxnet nuclear power station software virus episode) then the last thing anyone is going to be thinking about is financing football clubs.
Of course I am not saying Mansour bin Zayed bin Sultan bin Zayed bin Khalifa Al Nahyan will be plug pulling tomorrow, but as I mentioned it does stress the benefit to a club of being self-financing. You just never know when one of these internecine battles will flare up.
There is also the issue of the World Cup, as I mentioned in the last post. But I am sure such clear headed well-organised organisations like Fifa and the FA have this under control.
http://untold-arsenal.com/archives/62142
