Cabin pressure

If you’re in the airline business you have to spend and Etihad has taken the industry to new heights, signing more cheques for aircraft and expanding faster than any of its competitors. In his final interview as CEO of the UAE’s national airline, James Bennett met Robert Strodel and found out why a chief executive can pay the ultimate price for working 18-hour days

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By  James Bennett Published  July 6, 2006

|~||~||~|The spark of a lighter followed by the inhaling of a cigarette and a deeply drawn out sigh are everyday sounds for Robert Strodel, the first ever CEO of the UAE’s national airline Etihad. And to top it off, he’s tired, stressed and because of the incredibly long hours he puts in, hasn’t even had the chance to watch his new state-of-the-art television set. On the other hand, however he recognises that to make a business a success, certain personal sacrifices are necessary. Unfortunately for Strodel he paid the ultimate sacrifice and resigned a few days later. “I am smoking more, yes. It is putting more strain on me but that is what we are paid for,” he said coughing. “I do read a lot. The funny thing is that I bought myself a huge television with I don’t know how many channels which I never switch on at all.” Austrian-born Strodel had been working non-stop since he joined exactly 10 months ago, and with Etihad launching 30 routes in 30 months, had had to move faster than most chief executives in the region. “It’s been challenging,” he replied grinning when asked how his first year behind the cockpit had been. The UAE capital’s national airline is one of the fastest growing companies not only in the Middle East, but also in the world, and as we spoke, Strodel reeled off a list of a further six new destinations in almost automaton-like fashion. “We have been 30 months in existence and we fly to 30 destinations. In the next two months we will add another six destinations. We started Paris on 3 May, Dhaka started on 4 May, Casablanca on 2 June, Khartoum will start on 5 July and in between whenever we find time, we will go and open up Doha on 18 June and Kuwait on 1 July. The reasons behind Strodel’s swift departure remain unclear, with Etihad refusing to reveal any details and calling it a “routine change”, however, after meeting the man himself, the enormous pressure of running a multi-billion dollar spending, lightening-paced, government airline looks to be the most likely answer. Etihad’s former head of cargo and ex-Lufthansa managing director had a huge task on his hands with over 76 nationalities working at the airline and the recruitment process a never-ending element of running the business. It also didn’t help being involved in such a competitive and price sensitive industry, but Strodel was a man with a mission and appeared determined to see it through. “The working hours are very long and I’ve been working 18 hour days. Opening 30 destinations in such a short space of time, preparing the introduction of new aircraft that are coming in at two a month – which is incredible – this is really challenging stuff,” he said. “In addition we need to employ a huge number of people to operate these aircraft such as cockpit crew, cabin crew and sales staff, for example. We are recruiting these people all over the world and now have 76 nationalities. “To bring them all together, to establish a certain standard, guarantee that you have that standard as a constant backdrop and try to be better than the others in the long-run, that’s quite something.” Despite the almost inhumane schedule and hours he set himself, Strodel said that the past 10 months had been some of the most exciting of his career. But he also added that regardless of spending the majority of his day in the office he still made sure that his staff were as content as he was. “It’s definitely the most interesting job I’ve ever had. I don’t think that my style fits into any category. I try to treat my colleagues fairly, I try to delegate as much as I can and motivate them, and try to get the best people which I can possibly get to market in order to define a future orientated product. One thing I can say is that I enjoy it and I don’t mind being an example to others. I do this as often as I can.” Ironically, Strodel himself admitted that the pressure of ensuring that each element of the business ran smoothly and continued to be successful was intense, but he added that the rate of Etihad’s growth had not been too fast, and that the airline’s rapid progression had been more about grabbing the right opportunities at the right time than anything else. “I don’t think we have grown too quickly, no but I also don’t think we could have grown faster than we have done. At the moment we are still on track.” The growth of Etihad, however, is only one part of Abu Dhabi’s expansion plans and only one element of why Strodel said he was enjoying his job more than at any other point in his distinguished aviation career – just don’t mention any comparison with Dubai. “Abu Dhabi has its own heritage, philosophical values and we don’t need to copy other emirates. We want to be different, we are different and it is a different environment. Don’t forget that the emirate cannot be compared to Dubai. It is the richest emirate and we still have oil and gas reserves for more than 100 years. We do things at our own free will,” he said defensively. “If you look at the GDP of the UAE, more than 60% is being produced in Abu Dhabi anyway and only 40% in the other emirates, so the perception that the rest of the world has of the UAE is unbalanced because Abu Dhabi is the engine that is running the UAE.” The growth story doesn’t stop there. With Etihad reaching such a grand scale and progressing faster than the combined speed of its fleet of planes, it also rapidly needs a larger infrastructure base as well as a carefully constructed forward-looking business plan. This is something Strodel regularly monitored on a daily basis, however he said this was not as easy as it sounds, particularly as the airline has outgrown its runway space. “We are expanding the airport and this will be done in stages. In order to keep up with our expansion we have to come up with some interim measures. “One interim solution will be an interim terminal for Etihad and this will be finished next year, then we will build a second runway, which is being built at the moment and 2km from the first one. Between those two runways, we are going to build terminals and all the other facilities you need to run an airport.” Not only is the lack of physical space an issue, forward planning to match and exceed the competition, as well as to provide customers with the latest in airline comfort and technology, was also a vital part of Strodel’s everyday role as chief executive. And the fact that both Boeing (787) and Airbus (A350) released two very competitive planes at similar times didn’t help matters either. “We are currently evaluating both aircraft manufacturers. This is a long process and we must be extremely cautious in what we do, so we’re currently making an economical evaluation, seeing how future orientated planes are being built, how they would fit into our network and then we’ll make a decision,” he said. “We need to know what maintenance and what kind of performance we can expect and it’s very, very difficult to make an assessment and a decision straight away.” Etihad currently has a fleet of 17 planes including five of the world’s largest and longest-range aircraft, the Boeing 777 and one Boeing 767, plus 11 Airbus’s including ten A330-200’s, one A340-300 and four of the latest gigantic A380s on order ready for delivery in 2007. In 2004 it created aviation history by placing, in its first year of operations, a US $8 billion (AED29.3 billion) order for new aircraft, US $7 billion of which was destined for the 11 Airbus’s. But Strodel said that it was only in the last month that he had become satisfied with the business’s progress. “We are getting our own aircraft and that is great news. So far we have been operating with leased aircraft and we have been limited in numbers, but now the aircraft that we have ordered have been delivered, and we are trying to create a balanced network between north and south and east and west. You also have to feed into that network and this is what we are doing.” It seems, however, that spending billions is not enough. Founded and funded by the Crown Prince of Abu Dhabi and deputy supreme commander of the UAE armed services, and Etihad’s chairman Dr Ahmed Bin Saif Al Nahyan, there is a lot more activity to come and money is no object, no matter whether the business is hitting profits or not. Strodel did not seem concerned about Etihad’s bottom line but insisted that to open an airline “you have to spend”. The only major worry facing Etihad and the aviation industry he said was the never-ending rise in the price of fuel – an issue he watched very closely whenever he had a spare moment. “We have prepared a business plan and we will break even from five years from the first full year of operations – I would say 2009. But there are lots of external factors that we cannot influence. Who knows how the oil price is going to react? I mean I watched it this morning and one barrel of brent oil was worth $72.60. I watch it every morning with very big eyes.” On the other side of the coin, Strodel said that he also had to take a cautious budgetary approach to how fast the business moved. “We have made certain calculations which are worst case scenarios and we have put in very conservative assumptions for the oil price. As long as we are in that range we know we can manage. We do not hedge at the moment because to hedge now with prices the way they are would not be sensible.” The other issue on his packed agenda, as if airport extensions and world destination domination were not enough, was expansion through acquisition. The airline had long been tipped to buy another European company and Strodel acknowledged this was firmly on his business radar. “We have registered our interest in purchasing shares in Cargolux. There are 33.7% shares available on the market and at the moment these are in the hands of the government of Luxembourg and we have to see what the government does next. I think there will be a decision this year, but legal transfers of shares and arranging seats on the board takes a long time. The final decision is still up in the air.” Unfortunately this was not the only thing that was up in the air. Within days Strodel was gone and Etihad appointed Geert Boven as its acting CEO. Asked what his hardest task was, Strodel replied that it was “developing future orientated projects and predicting future trends.” Sadly there was one thing he couldn’t predict.||**||

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