Etihad’s Former CEO Has No Regrets (But Probably Should)

Filed Under: Etihad

One of the most controversial airline CEOs of the past few years is James Hogan. Hogan was CEO of Etihad Airways from 2006 until 2017, and really built the airline into what it is, for better or worse.

Hogan had worked in the airline industry his entire career. In 1975 he started as a regular employee for Ansett Airlines, and he worked his way up over the decades. He eventually became an executive at British Midland (which doesn’t exist anymore) and then CEO at Gulf Air (which is a shell of its former self), before being appointed CEO of Etihad.

Etihad grew in all the wrong ways under Hogan’s leadership

Under Hogan’s leadership Etihad not only tried to expand into a huge global airline and compete directly with Emirates, but they also tried to strategically invest in airlines to create a global alliance of sorts.

How has this worked out for them?

  • The airline has lost nearly five billion USD in the past three years
  • Etihad’s biggest airline investments were in airberlin, Alitalia, Jet Airways, and Air Seychelles; airberlin and Jet Airways have liquidated, Alitalia is only just barely alive thanks to the Italian government, and Air Seychelles restructured and cut all long haul flights
  • Etihad has canceled dozens of widebody plane orders, which I imagine cost them a lot of money
  • The airline now plans to just become a boutique airline focused primarily on serving those flying to & from Abu Dhabi

So here’s the thing about Hogan — there’s no denying that the airline was completely built up under his leadership. However, the airline was built in an unsustainable way, just about all of their investments didn’t pan out, they’re now reversing their strategy, and they’re losing billions of dollars. Arguably thousands of people are out of work because of the rash decisions of Etihad (like them suddenly pulling funding from airberlin).

Hogan can’t possibly be proud of that, can he?

Jet Airways recently went out of business

What Hogan has to say about his time at Etihad

Hogan recently spoke at the Skift Forum Europe, and Arabian Business has some interesting quotes from him. First of all, I’m surprised at this point he’d want to publicly be seen still talking about the airline industry. But if you think you’re going to hear him say “well, there are things I would have done differently,” think again.

Here are a few quotes from Hogan about his time at Etihad:

“Quite frankly, it was a unique opportunity to build a business but since then I have moved on. I have my own business now.

It’s not appropriate to [look back]. I was at Etihad 11 years and I had a wonderful experience but then you move on… you move forward.

I started my own business two years ago. I was at an analyst lunch yesterday and they asked me, ‘What would I do that was different’? I said ‘nothing’.

I created a brand from scratch. I created a proposition and I created a global look and feel and I managed it within constraints.

[Working for Etihad] was a unique opportunity to build a $300 million group into a $20 billion group over the years.

Etihad ordered A380s under Hogan’s leadership

Why Hogan (maybe?) deserves the benefit of the doubt

While I’m no Hogan fan, I do think it’s important to give him the benefit of the doubt in at least some way. Etihad is owned by the government of Abu Dhabi, and I imagine that they perhaps don’t always send the most consistent mandates to management.

As Hogan said, he had to manage the airline within constraints, and I imagine a lot of Etihad’s investments were politically motivated, and may even have been above Hogan’s head.

So what we’ll never fully know is how much of Etihad’s current state is due to bad decisions from Hogan, rather than bad decisions from the government. I imagine when oil revenue is doing well the government is happy to throw billions of dollars at the airline, while when revenue is down, it’s probably a different story.

Etihad’s 787 first class

Bottom line

While Etihad experienced a lot of growth under Hogan’s leadership, the airline has very little to show for it. They’re losing billions of dollars, and their strategy hasn’t panned out in any way (both in terms of Etihad being a global airline, and in terms of their plan to create a global network of airlines).

It’s interesting to see Hogan’s perspective on things now. For what it’s worth, Hogan now runs an investment advisory company in Switzerland, and many of the people working with him are also former Etihad employees.

I’m not sure they’re necessarily the people I’d go to for financial advice, but…

What do you make of Hogan’s statements about his time at Etihad?

  1. I think Hogan’s statements were fine. You move on. What’s important is what you learn from the experience and what you do after with it. To give him credit, he took risks and had they succeeded, he would have been lauded etc. but the investments didn’t work out so he accepted the consequences rather than blaming other people… and he moved on. Seeing how even former Etihad employees opted to move with him to Switzerland shows he was at least respected/trusted by his colleagues. Sometimes it’s just luck.
    It’s always easier to look back in hindsight and say I wish I did this or I wish I did that… but if he did, then he wouldn’t be where he is today.

  2. A total charlatan. But people like him never seem to get their comeuppance in this world and they seem to do just fine. You would be stir crazy to go to him for financial advice though.

  3. Not to be too pedantic here, but Jet Airways haven’t liquidated or gone out of business (yet).

  4. He must be a great self-promoter. Everywhere he has been it has ended in failure but somehow he keeps popping up elsewhere.

  5. Judging on decisions he made rather than government influenced, he didn’t get it right. He was able to jump the learning curve and go with Emirates strategy (which took them 20 years to achieve) but he opted to be different. You can see that from the diversity of the aircrafts he ordered, he basically ordered every new aircraft that was announced with out minding the economies of scale. He could not match the quality of service that Emirates provided even though it was so easy to mimic. I stopped flying etihad because of the service quality compared to Emirates. I also have a doubt that all the acquisitions etihad made were politically influenced, some in my opinion was his way of building his own alliance thinking that customers will choose an increased transit/flight time just because of customer loyalty. Bottom line, Tim Clark would of made a fortune out of this venture.

  6. Regard for example the workers of Air Berlin suddenly being out of a job, I don’t see what worse could have saved them.

    Although their failure has spoiled a great One World connector in Central rather than just Western Europe, and made the whole purpose of the New Brandenburg Airport as an international hub far less certain.

    Those who know Berlin well also know that despite it being the Capital City of the biggest and central EU state it is overall very much a short haul destination at both current airports now.

  7. Perhaps you have to have unwavering self belief to reach these CEO type positions, but a bit of humility wouldn’t go astray.
    Glad he can sleep so well at night, but surely picking Alitalia, Air Seychelles and Jet Airways was not by any measure the best business decision of the last decades.

  8. Was the goal of the owners ever really just about a profitable airline, or was a large part about building brand Abu Dhabi and soft power?
    He certainly built a global brand and even as they cut back now, the brand is well recognized. I see similar things in soccer where they own Man City and have flung endless money into the club. This is a way for them to build a brand and extends their soft power

  9. Ben, you all said it in the first paragraph: How many airline managers can show a track record of managing airlines which did not survive their leadership or at best shrinked dramatically ?

    And this was all the more avoidable as Hogan made EXACTLY the same mistake as an incompetent CEO hired by Swissair (from American Airlines, anybody surprised?) who created an alliance of money-losing, diverse, and semi bankrupt airlines (sometimes all three) under the name “Qualiflyer”. That resulted in the 2002 collapse of Swissair.

  10. Of course he has no regret. He collect big check for more than a decade and spent other people ‘s money. Why should he regret? If you loose your job in two years because your bad deal making so you couldn’t fully take advantage of this job offer, then you might regret.

    Also the excuse on being a government owned airline is lame, there are multiple ME airlines in the same situation and none other in this bad a situation. I mean others may not be shining example of smart businessmen, but Etihad just way too extreme.

  11. How is Air Serbia doing these days? For a while, they had a great business class product but now they’re back to having the same old business class seat (economy seat with blocked middle seat) and average to below average food…

  12. I worked there as an external advisor for a year and in twenty years of advisory work, I’ve never seen someone create as poisonous a work environment as Hogan did. He held weekly ‘shouts’ on Tuesdays where he would call in his executives and shout at them individually half an hour. Of course they then went and did the same to their reports. Awful leader commercial and organisationally.

  13. How he got the Etihad job in the first place is a mystery as he totally ruined Gulf Air which before he arrived was one of the Middle East’s best airlines .

    What he did at Etihad as well was obviously the road to failure as it was just a repeat of Swissair.

    Yet aviation seems to be littered with these kind of characters .A very rough correlation seems to be the more the utterances of the CEO in the media about their strategies the less the success.

  14. When I look at this man my thoughts are simple, all the airlines he has touched how many have survived and how many have continued without troubles?

    I fear for the next airline he is involved with.

  15. Ah the “It was all fine when I was in charge but it was the guy that came after me that really fluffed it up” defence.

  16. I was a very frequent flyer with British Midland during Hogan’s time. It was a leading but small European Airlines during that time which had bigger airlines jumping to compete on service standards and fares, BD really shook the market.

    It’s certainly worth making clear that BD went down hill twelve years after Hogan left so nothing whatever to do with him and all to do with his successor who confused the offering and alientated their best customers and staff but he refused to review his destructive strategy. Ultimately at the end it was owned by Lufthansa and it would have required huge management capacity to turn it round.

    At the same time Lufthansa had basket case Austrian to sort out and they had to make a choice so let BD go to BA but given that OS is still a basket case, maybe they made the wrong decision as they lost a huge Heathrow asset and allowed BA to consolidate there in a way that now harms competition.

  17. I went to a talk Hogan gave a few years ago (whilst he was still at Etihad) – and he waffled on about innovation and taking risks.

    By then it was clear that the “Residence” occupancy rate was terrible … so I asked him if he was prepared to admit failure and change strategy.

    His response made it clear that his “permission to fail” claim was just talk.

    Hard to respect CEOs who spout such empty guff.

  18. One needs to place himself in James position and understand the type of constrains he had.

  19. @Mark

    You can’t blame Hogan for the collapse of Gulf Air.

    Gulf Air was an airline founded and funded by Bahrain, UAE and Oman, all of whom did NOT have an airline at the time.

    Then the UAE (Dubai Maktoums) decided they wanted their own sandbox to play in and, at the time, were flush with money. So they started Emirates in direct competition with their partner Gulf Air. They eventually cut the ties and Gulf Air now basically was Oman and Bahrain. Then Oman decided they wanted to create their own airline and off they went. Up until this point Abu Dhabi was having none of the Dubai EK and were still partnering with Gulf Air.

    Then their egos were in a twist and they created Etihad.

    So Gulf Air was shredded by the partners in the airline who created their own competing airlines. Can’t blame Hogan for that. The unlimited resources available to EK allowed them to create a large enough network that was self-sustaining and appears to have survived the global slowdown and consolidation. Etihad did not have direct government funding but was rather a toy of one of the Al Nahyan princes so had much more limited resources on startup. Because they were small potatoes they also suffered from being last in the queue for the A380 for example – delivered years after the EK orders.

    As for the rest – my experience working in the Middle East is that decisions are not made at the CEO level and depend on the whim of the day. No surprise that some were not well founded.

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