Australian James Hogan, 60, who over the past 10 years has developed Etihad Airways into an aggressive rival to Dubai's Emirates and Qatar Airways, will step down as president and CEO of the group in the second half of 2017. Etihad's Australian chief financial officer, James Rigney, will also leave this year, Etihad said.

Chairman Mohamed Mubarak Fadhel al-Mazrouei said Etihad was continuing a "company-wide strategic review" which could include adjustments to the network of equity partnerships with other carriers that Hogan used to engineer rapid growth at Etihad.

Two of the major airlines in which Etihad invested, Air Berlin (>> Air Berlin Plc) and Alitalia [CAITLA.UL], are losing money, adding to pressure on Etihad's earnings caused by slowing growth in the Middle East's aviation market.

However, Mazrouei said state-owned Etihad was not abandoning the equity partnership model, which along with code-sharing tie-ups had delivered 5.5 million passengers onto its flights in 2016.

"We must ensure that the airline is the right size and the right shape. We must continue to improve cost efficiency, productivity and revenue. We must progress and adjust our airline equity partnerships even as we remain committed to the strategy,” he said.

An Etihad spokesman told Reuters there was no link between the strategic review and Hogan's departure, which had been planned for many months.

INVESTMENTS

Etihad owns stakes in seven airlines around the world: Air Berlin (>> Air Berlin Plc), Alitalia [CAITLA.UL], Air Serbia, Air Seychelles, Etihad Regional in Switzerland, India's Jet Airways (>> Jet Airways (India) Limited) and Virgin Australia (>> Virgin Australia Holdings Ltd).

In 10 years, Etihad grew from a 22-plane regional carrier into a global operation with 120 aircraft and 26,000 staff. Its growth helped attract visitors to Abu Dhabi as the wealthy emirate, seeking to diversify its economy beyond oil, developed a tourism industry.

But in recent months, a slowing regional economy, overcapacity in the airline industry and a strong U.S. dollar have hurt Etihad. In December, the group said it was cutting jobs in some parts of its business, but did not give a number.

An industry source familiar with matter told Reuters that Hogan's departure was unlikely to mean any change to the current restructuring plan for Air Berlin, which had already obtained board approval.

"However if future injections of cash are needed, it may look very different,” the source said.

Alitalia, in which Etihad has a 49 percent stake, said on Monday that it planned to cut non-labour related costs by at least 160 million euros ($172 million) this year as it tried to become profitable.

Industry sources told Reuters that the Italian carrier's restructuring might include up to 2,000 job cuts and the grounding of planes.

On Tuesday, Etihad said it had started a global search for a new group CEO and a new CFO. It said it was grateful to Hogan and that he and Rigney, who is 49 years old, would join a Europe-based investment company, which it did not name.

Etihad reported a consolidated net profit of $103 million for 2015. Abu Dhabi is one of the richest governments in the world and could easily finance any earnings slump at the airline, but it has been seeking to make many of its assets more efficient in an era of low oil prices.

Etihad's two main regional rivals, also state-owned, have adopted different expansion strategies. Emirates has not emphasised equity alliances, while Qatar Airways has made some investments but focused on financially stronger partners.

For example, it owns a major stake in British Airways owner IAG, one of Europe's most profitable carriers.

"We will look at other acquisitions of airlines but we look at airlines that don't take the resources of Qatar, or attention of Qatar management, to fix issues. We will always go after goldsmiths, not scrap dealers," Qatar Airways CEO Akbar Al Baker said in 2015.

(Writing by Andrew Torchia; Editing by Mark Potter, Greg Mahlich)

By Stanley Carvalho and Victoria Bryan