(Refiles to correct "or" to "of" in 14th paragraph)
By Alexander Cornwell
DUBAI Dec 19 Emirates, the world's
biggest long-haul airline, and Abu Dhabi's Etihad Airways are
reviewing their workforce as overcapacity and a stronger dollar
put pressure on earnings.
The cutbacks show how the Gulf airlines' rapid expansion of
the past few years is slowing down against a more challenging
Dubai-based Emirates has offered redundancies to staff
working in accounting, finance, IT and other departments in its
head-office, sources familiar with the matter told Reuters. The
airline did not immediately respond to requests for comment.
Etihad said on Sunday it was cutting jobs, mostly through
"natural attrition." It did not say how many jobs would be
Emirates and Etihad employ over 103,000 and 26,000 staff,
respectively, according to their websites.
While lower oil prices have cut operating costs for the
carriers, demand for high-margin premium cabins has softened as
Middle East travel budgets tightened.
East to West traffic, an important route for Gulf carriers,
has also diminished after a wave of militant attacks in Europe
and Turkey over the past year.
"We may see a slowdown in the pace of growth by Gulf
carriers or rational capacity or route reductions as indicated
already by Emirates," John Strickland, aviation expert and
director of London-based JLS Consulting, said.
Emirates, which reported a 75 per cent decline in half-year
profit on Nov. 9, suspended flights to Nigeria's Abuja on Oct.
30 and has signalled that more flights to Africa could be
"Trading conditions across the planet are very difficult,"
Emirates President Tim Clark told journalists in Berlin last
Etihad has stopped flying to Larnaca in Cyprus and will
suspend flights to Sao Paulo in Brazil in March 2017.
"Threats are emerging to the success story of the Gulf
carriers," said the International Air Transport Association
(IATA), which represents some 265 airlines, on Dec. 8.
IATA estimated Middle East carriers will make $300 million
in profit in 2017 compared to the $900 million forecast for
The slowdown may come as a welcome reprieve for European and
U.S. carriers which have accused Gulf carriers of receiving
unfair state subsidies that have allowed them to boost capacity
on key routes. The Gulf airlines have rejected these
Lufthansa, which has been a fierce critic of the Gulf
carriers, last week signed a code share deal with Etihad and
said it would look at ways to deepen the fledgling partnership.
Etihad's seating capacity will contract in the first half of
2017 by 5 percent compared with Emirates' growth of 7.6 per cent
and Qatar Airways' of 10.2 per cent, according to airline
industry research specialist the CAPA Centre for Aviation.
"It would be natural [for Etihad] to defer or cancel
aircraft due in the next few years while the market is soft,"
Will Horton, senior analyst at CAPA - Centre for Aviation said.
An Etihad spokesman said the restructuring would have "no
impact on our fleet."
When asked whether economic conditions would mean Qatar
Airways would have to look at cutting operational costs,
including reducing jobs, a Qatar Airways spokesman pointed to
plans to launch 15 new routes in 2017-2018 and an Oct. 7 100 jet
(Reporting by Alexander Cornwell. Additional reporting by
Victoria Bryan. Editing by Jane Merriman)