Struggling Etihad Airways Close First & Business Class Lounge in London

UAE flag carrier airline, Etihad Airways announced a mammoth $1.87 billion annual net loss in 2017, revealing the full extent of the fragile state the Abu Dhabi-based carrier is now in. Not only are fewer passengers travelling with the UAE national carrier, but Etihad Airways took an $808 million hit from its investment in Air Berlin (now bankrupt), and Italy’s Alitalia, which has already filed for bankruptcy, but was given support to continue its daily operations.

Last month, reputable independent rating agency ‘Fitch’ said there was a “high execution risk” in Etihad Airways’ turnaround plan, and Fitch added ‘Etihad Airways is expected to continue making losses through to 2022.’ The rating firm also said the Abu Dhabi airline had “very weak” financials and lower unit revenues than its Gulf and European peers, despite cost advantages on the latter.

etihad

In what is the latest string of significant cuts to at airline, Etihad Airways will now completely close its own London Heathrow First & Business Class lounge — a huge blow to its premium paying passengers. The Abu Dhabi-based airline has now sold the lounge space to third party, pay-to-use lounge company ‘No.1 Lounge.’




The lounge will cease to exist as Etihad’s own as soon as this week, leaving Etihad’s own premium passengers sharing with all other pay-to-use lounge visitors, and other airline guests, in a ‘No.1 Lounge’ to be named ‘The House.’

The closure of its London lounge demonstrates the desperate state the airline is now in. London is traditionally one of Etihad’s most premium and lucrative markets, with an almost guaranteed demand for its A380 First and Business Class cabins. While Etihad’s load factors have declined over recent years…for the airline to close a major premium market lounge, the future of Etihad (an airline that previously invested heavily in its premium offerings) isn’t promising.

Since the overall losses approached nearly $2 billion, Etihad has continued to reduce its fleet size, and has also cut key destinations including Edinburgh, Scotland and Perth, Australia, in order to attempt to begin trimming its losses.

In June this year, Etihad Airways arranged for some pilots to be transferred over to the Dubai-based Emirates, given Etihad’s cuts are ongoing, and Emirates need the pilots.

Furthermore, since April — Etihad has been encouraging its pilots to take 1-year unpaid leave, amid an attempt to reduce salary overheads.

Meanwhile, in neighbouring Dubai, Emirates (Etihad Airways’ neighbour) last financials were healthy, and the airline hasn’t been plagued with the poor investment and strategy decisions that Etihad have endured.

Final Thought

The latest cust to Etihad Airways’ passenger experience is incredibly significant. It’s now also expected that Etihad will close its lounges in Paris, Melbourne, and Sydney, among other destinations. Etihad’s premium lounge at Manchester has now been taken over by a third party provider, ‘1903.’ For its international premium passengers, Etihad Airways is, unfortunately, becoming less attractive as the months pass by. The Abu Dhabi-based airline will be better suited retiring its ‘super-connector airline’ status, as its offerings are by no means equal to the likes of airline giants, Singapore Airlines, Qatar Airways, and Emirates.

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