Emirates president says the airline won't merge with Etihad, despite rumors spurred by the coronavirus crisis

• Gulf airlines Emirates and Etihad have no plans to merge, despite the financial hardship caused by the coronavirus pandemic, Emirates president Tim Clark told Business Insider.
• Speculation about a merger has swirled for years, and has resurfaced due to the pandemic.
• Clark said that the two UAE airlines will continue to cooperate in certain business areas, but will remain separate entities.

For years, rumors have circulated about a possible merger between Emirates and Etihad airlines. To many, the United Arab Emirates carriers seem a good match, given their similar business models and various financial stumbles. Last year, the speculation intensified when Etihad found itself with $4.7 billion in losses over three years, largely due to failed investments in other airlines and competition from rivals.

But even as the coronavirus pandemic makes past airline problems look quaint, the two carriers have no intention of joining forces. Not according to Sir Tim Clark, president of Emirates, who told Business Insider in an interview that the airlines were well positioned to weather the crisis and get back to business as usual, despite Etihad's relatively weak financial position.

Emirates is based in Dubai, about 70 miles from Etihad's Abu Dhabi home. The two carriers, along with Doha-based Qatar Airways, each operate a hub-and-spoke model, using their Gulf hubs to effectively connect the eastern and western hemispheres.

The rise to prominence of the Gulf airlines in the 2000s led to an essential transformation of global air travel, bringing one-stop connectivity to virtually every major city in the world, while allowing travelers to bypass classic hubs in cities like London, Paris, and Frankfurt when traveling between the Americas or Europe to Africa, the Middle East, and Asia.

However, the playing field has become increasingly crowded between the two carriers and Qatar Airways, especially given the rise of low-cost competitors across the Middle East and Asia.

As the COVID-19 pandemic has wreaked havoc and devastation on the global airline industry — particularly on long-haul airlines — speculation surrounding a merger between the more-stable Emirates and the loss-making Etihad has rebounded.

Clark categorically denied the possibility.

"Etihad is a much leaner airline than it was three or four years ago, and it's far more fit for purpose than perhaps it was," he said. CEO Tony Douglas has downsized the airline to make it a better fit for the markets it serves, Clark said, without overextending itself.

According to Clark, both airlines were well-positioned at the start of the crisis, and are well-positioned now to return to form once its over.

"Etihad was improving its situation. It wasn't a very good situation but it was getting better. Emirates was on a roll up until January, we were going to finish one of our best financial years," he said. "So if you remove COVID, where were we? We were both getting on with our jobs."

Clark said that he expects travel demand to pick back up once the pandemic is brought under control through vaccination or the development of a treatment, and thinks that even with recessions caused by COVID-19, business will start to return to normal by mid-2022.

"I've seen the growth of mass movements in air over the last 45 years," he said. "And frankly it's unstoppable."

Once demand returns, Clark said, Etihad will likely continue to realign itself as a leaner airline, separate from Emirates, even if the two cooperate on various aspects of the business, like procurement and other "back of house work."

In any case, Clark said, the governments of Dubai and Abu Dhabi — which own the national airlines — would have final say.

"The two remain ultra-competitive," he said. "My own view is that they're both good and will be strong enough to remain separate, operate as competitors, and do the right thing for the population of the UAE, and also be very good in what they do in the international market.

"If you can get through the next couple of years," he said, "then there's a fighting chance of things being fine."