Thirion looked at what was happening in the banking sector and quickly realised that treasury would never be the same again. Asked how his approach to treasury evolved in the wake of the banking crisis he explains that the biggest change was around how he perceived the safety of counterparties, particularly in the case of the banks. “As you enter into a global crisis, you ask yourself fundamental questions about risks you are facing, especially with financial institutions where it profoundly changed people’s views on credit risks. I think for many of us that will, in our lifetimes, be the biggest thing we remember about that time.”
In the post-Lehman world, companies not only had to manage sources of funding and lending very carefully, but also keep a close eye on counterparty risk. Fortunately for Etihad Airways, the company had strengthened its focus on both issues since 2007, broadening its access to lenders and hedging banks, in addition to putting in place strict counterparty risk limits. This ultimately meant that the airline did not suffer any losses due to failures in financial services firms and were able to continue to hedge and fund the business.
A series of unfavourable natural events, such as the Icelandic ash cloud that grounded flights over Europe for a week in April 2010, served to compound the difficulties facing airlines further. Together with the fall-out from the banking crisis, circumstances conspired to create what is quite possibly one the most testing environments the industry has ever faced.
Thirion recounts that he too was one of the people who became stranded that week. The tale he tells is one that people might look back on and see the funny side of years later. At the time, however, the situation was pretty serious.
“I had flown out for an awards ceremony and I only had the clothes I was wearing and a tuxedo, so I ended up spending five days in London with a tuxedo and one change of clothes,” he says. “Many members of our senior management were affected as well, but we all pulled together and wherever we were we tried to assist the passengers who were stranded with us.”
Easing the load
From environmental headwinds to economic ones, Thirion has successfully navigated Etihad Airways’ treasury through some tough times, thanks in no small part to the strength of his senior treasury team. He has six direct reports in a total team of 45 people across all functions under his responsibility who help him manage the ever expanding list of responsibilities that comes with being a treasurer at one of the world’s fastest growing airlines.
The majority of Thirion’s time these days is split between guiding his treasury team, bank relationship management, risk management, strategic funding and providing strategic support for the group’s various partnerships airlines. These are not the things which can be easily automated and, as such, creating and filling new positions including the recent addition of a Deputy Treasurer and a Head of International Treasury – has been crucial in helping him stay on top of the growing volume and complexity of his duties.
In addition, Thirion says that the company is about to hire a dedicated compliance manager in treasury in order to relieve some of the regulatory strain on the department’s middle office. In recent years, treasury has had to contend not only with changing processes around trade confirmations, under new rules such as the European Market Infrastructure Regulation (EMIR), for example, but also a growing amount of basic administration when providing information to banking partners. “Compliance activities related to banking and financial markets regulation tend to take up an ever increasing amount of time and we are adapting our structure and deploying dedicated resources to better deal with this challenge,” he says.
As one might expect of a man who began his career working on web integration for business legacy platforms, Thirion has a strong appreciation of the role that technology can play in freeing up more time and resources from day-to-day manual undertakings. He says that the company is now in the process of reviewing the new TMS solutions on offer in comparison to its current system, as well as looking at a number of other automation and efficiency projects.
“Technology is fundamentally important to our operations,” he notes. “We are continually looking at ways to introduce new technology, make processes more automated and efficient, and to remove manual processing so that we are able to handle our increasing volumes more effectively so that our staff can focus on value adding activities.”