BA Boeing Co

By Robert Wall and Nicolas Parasie 

Etihad Aviation Group said Tuesday that Chief Executive James Hogan would depart the state-owned airline amid growing pressure on the rapidly expanding Middle East carrier.

Mr. Hogan, who led Etihad Airways for over a decade before last year establishing the aviation group that also manages investment in other carriers, will leave the company in the second half of this year. Chief financial officer James Rigney also will depart this year. A global search for their replacements has already begun, the company said.

Etihad Airways is one of a trio of rapidly expanding Middle East airlines that include more established Emirates Airline and Qatar Airways. They have invested heavily in new Airbus SE and Boeing Co. planes to funnel traffic through their Persian Gulf hubs. European and U.S. carriers have accused the airlines of unfairly benefiting from state subsidies, a charge they all have denied.

Mr. Hogan, who has led Etihad since 2006, invested in a series of other airlines to help drive traffic and catch up with his older Mideast rivals. Those investments include minority stakes in Alitalia, Air Berlin PLC and India's Jet Airways.

The investments have helped drive traffic to the Abu Dhabi hub, but have come at a cost. Air Berlin, Germany's second-largest airline, has required repeated capital injections but continued to lose money. Mr. Hogan, as late as last week defended the strategy: "We are committed to our equity partner strategy."

"We are regularly approached by airlines that want to become part of this model," he said in Dublin.

Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said: "We must progress and adjust our airline equity partnerships" even as he vowed to stick with the principals of the plan. The size and structure of the company would be reviewed and belt tightening measures considered.

Etihad Airways late last year also announced job cuts. The airline had deferred some planes deliveries amid growing pressure on ticket prices. The Mideast carriers have been hit by softening demand for their premium seats from the drop in oil prices in the second half of 2014.

Write to Robert Wall at robert.wall@wsj.com and Nicolas Parasie at nicolas.parasie@wsj.com

(END) Dow Jones Newswires

January 24, 2017 02:28 ET (07:28 GMT)

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