State-owned Emirates and Etihad, two of the Middle East's top airlines, denied a Bloomberg report on Thursday which quoted unnamed sources as saying Emirates was seeking to take over Etihad to create the world's largest carrier.
"There is no truth to this rumour," an Emirates spokeswoman said. Etihad made a similar statement.
Emirates is owned by the Government of Dubai, the region's tourism hub, while Etihad is controlled by the government of neighbouring Abu Dhabi.
Both airlines, which grew rapidly earlier this decade, have faced pressures in the past two years because of tough competition in the industry.
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Earlier this year, the two carriers signed agreements to cooperate in some areas, such as a deal under which Etihad pilots can join Emirates on a temporary basis for two years.
However, Sheikh Ahmed bin Saeed al Maktoum, chairman of Dubai Airports, president of the Dubai Civil Aviation Authority and chairman and CEO of Emirates Group, ruled out a merger in May this year.
A senior banker monitoring business in the Gulf said the idea of an Emirates-Etihad merger had been circulating "on and off for at least five years", but that he hadn't heard of any new development. No bank has been mandated to arrange a deal, which would be very difficult operationally, he added.
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