Emirates, Etihad airlines deny report they may merge

Emirates is owned by the government of Dubai, while Etihad is controlled by the government of neighbouring Abu Dhabi. PHOTOS: REUTERS

DUBAI (REUTERS) - State-owned Emirates and Etihad, two of the Middle East's top airlines, denied a Bloomberg report on Thursday (Sept 20) which quoted unnamed sources as saying Emirates was seeking to take over Etihad to create the world's largest carrier.

"There is no truth to this rumour," an Emirates spokeswoman told Reuters.

Etihad made a similar statement.

Emirates is owned by the government of Dubai, the region's tourism hub, while Etihad is controlled by the government of neighbouring Abu Dhabi, which thanks to oil exports is the wealthiest member of the United Arab Emirates.

Both airlines, which grew rapidly earlier this decade, have faced financial pressures in the past two years because of tough competition in the industry and a regional economic slowdown due to low oil prices.

Earlier this year, the two carriers signed agreements to cooperate in some areas, such as a deal under which Etihad pilots can join Emirates on a temporary basis for two years.

However, Emirates chairman Sheikh Ahmed bin Saeed al-Maktoum ruled out a merger in May this year. A takeover could be politically difficult as Dubai and Abu Dhabi have long competed for business in some areas even as they cooperate in others.

A source close to Etihad told Reuters on Thursday that while a merger could conceivably happen in the future, Abu Dhabi would not quickly give up control of its airline and brand, especially after it had invested billions of dollars in its international airport and other aviation infrastructure.

A senior banker monitoring business in the Gulf said the idea of an Emirates-Etihad merger had been circulating "on and off for at least five years", but that he hadn't heard of any new development.

No bank has been mandated to arrange a deal, which would be very difficult operationally, he added.

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