The boss at Etihad Airways is on his way out. His ambitious expansion strategy could be next to go.
Etihad announced Tuesday that group CEO James Hogan will step down in the second half of 2017 as the company conducts a strategic review of the growth model he pioneered.
"We must ensure that the airline is the right size and the right shape," said board chairman Mohamed Mubarak Fadhel Al Mazrouei.
Hogan has been the head of the Abu Dhabi airline since 2006. Under his leadership, it grew into one of three key gulf carriers, competing with Qatar Airways and Emirates.
Etihad's rapid expansion was fueled by a novel strategy: Instead of forming codeshare alliances with other carriers, Hogan invested in them. In total, he took stakes in seven carriers including Air Berlin and Italy's Alitalia.
But not all of the investments paid off.
"Where Etihad has had success with Air Serbia and Air Seychelles, it has battled hard to try and turn around Air Berlin and Alitalia," said Saj Ahmad, an aviation analyst at StrategicAero Research.
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The company has struggled with industry-wide problems, including lower profits per passenger and fierce competition from low-cost carriers.
Etihad said it is already looking for a replacement for Hogan and CFO James Rigney, who is also leaving the company.
Ahmad said that Etihad, with a fleet of 120 aircraft, remains well positioned. But it might move forward under a different strategy.
"Whether the new leadership team follow this model remains to be seen," he said.
