Gulf airline Etihad partners with Air France-KLM

Associated Press Modified: October 8, 2012 at 3:45 am •  Published: October 8, 2012

The Air France-KLM deal could prove significant in that it shows a willingness by the company to work with a Gulf rival. It does not include Etihad taking an equity stake in the airline.

"It's relatively speaking a step forward in thinking 'let's try to do something with the Gulf carriers,'" said John Strickland, director of London-based aviation consultancy firm JLS Consulting. "It's a test."

Etihad has been more aggressive than larger Gulf rivals Emirates and Qatar Airways in forging partnerships with foreign carriers. Besides the stake in Air Berlin, in recent months it has bought 40 percent of Air Seychelles, the tiny island country's national carrier, and smaller stakes in Aer Lingus of Ireland and Virgin Australia. It now has codeshares with 40 carriers.

On Sunday, Etihad reported a 19 percent jump in third-quarter sales to $1.3 billion, and said it is on track to earn its second straight annual profit this year. President and CEO James Hogan said its partnerships with other airlines have been a key element in driving passenger traffic growth, even as it continues to grow its own fleet.

Etihad, which is owned by the Abu Dhabi government, has 67 planes in its fleet and another 100 on order. It recently began flying to Lagos, Nigeria, and plans to add destinations including Washington and Sao Paulo next year.