(Bloomberg) –Etihad Airways plans to start a new Abu-Dhabi-based low-cost carrier to cater for growing demand in the Gulf region for more affordable travel.
The new airline will be operated in partnership with Air Arabia, Etihad Chief Executive Officer Tony Douglas said in a statement, adding that the carrier will be launched in “due course.”

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Etihad has abandoned an attempt to build a global network of smaller airlines after a string of failures, prompting the state-owned company to cut routes, shrink operations and slash plane orders worth $21.4 billion.

Air Arabia, U.A.E.’s only listed carrier, in August posted a 75% jump in second-quarter profit to 210 million dirhams ($57.2 million). The shares have gained 33% since the beginning of the year.