While the negotiations primarily involve Air France and Etihad, an eventual deal would also include its affiliate Air Berlin. “If there is an opportunity, we would be keen to see that happen,” Hogan tells Aviation Week.

Linking Air Berlin with Air France would not automatically put into question the German carrier's membership in Oneworld in the short term, but it would shift the carrier's network priorities to align even more with the broader Etihad strategy and raise the question of how much added value the alliance membership brings. Hogan's opinion is that “Oneworld is secondary.”

Etihad bought a 29% stake in Air Berlin late last year for $105 million, while also providing a $255 million loan to its new partner. The German carrier's financial results have been deteriorating rapidly, but Hogan says he is convinced the company will turn the corner. He predicts Air Berlin will return to profitability “in the next 12-18 months.” And “they won't need another loan.”

Hogan cites ex-BMI CEO Wolfgang Prock-Schauer's appointment as the head of network and strategy at Air Berlin as important. The network “needs to be refreshed” and Air Berlin executives “know they have to make tough decisions.” Etihad has “no intentions” to fly North Atlantic routes from Europe, even though the bilateral air service pact between Germany and the United Arab Emirates grants UAE carriers limited fifth freedom rights to the U.S.

Etihad is close to announcing ties with Garuda Indonesia. The arrangement primarily concerns code sharing. Garuda's planned entry into the SkyTeam alliance was recently pushed back until 2014, mainly to allow more time to resolve information technology issues.