Etihad Airways has grown dramatically over the last couple of years through several acquisitions, and IBM has stepped up to the plate to help them build an effective information technology network to manage their larger operation. On Tuesday, the two firms announced an information technology deal valued at more than $700 million over 10 years designed to upgrade the airline’s reservations systems and reduce costs in network operations.
Of note, the deal between government-owned Etihad and IBM includes the development of technology to edict weather patterns to improve management of the airline’s flights at its Abu Dhabi hub and a full suite of customer analytics.
The statement released Tuesday also noted that around 100 Etihad staff will become IBM employees. The contract also calls for Big Blue to build a new data center close to Abu Dhabi, the capital of the United Arab Emirates.
Statement from Eithad Airways CTO
“We want to invest in innovation,” Etihad’s CIO/CTO Robert Webb commented in a recent interview. “We want technology to be pervasive throughout the business.”
Etihad’s new deal with IBM comes after striking a series of similar agreements with other suppliers, such as Sabre Holdings, SAP and Panasonic Avionics, Webb pointed out. The Middle East-based carrier has also negotiated contracts for products and services for all the carriers in which it has stakes to reduce costs, he said.
More on Eithad – IBM deal
Analysts note that Etihad Airways has spent hundreds of millions of dollars over the last few years scooping up minority stakes in other small airlines and offering more stable financing for their operations. The company has made significant investments in eight airlines so far, including Italy’s Alitalia, Germany’s Air Berlin and Jet Airways (India) Ltd .
Also of interest, IBM signed another IT upgrade deal with Deutsche Lufthansa AG around this time last year that was valued at $1.14 billion. Lufthansa claimed the extensive IT network revamp would lead to cost savings of $77 million annually.