Emirates and Etihad, backed by their state owners, have competed almost head-to-head developing global networks from their respective hubs in Dubai and Abu Dhabi that are just 128 kilometres apart.

Emirates is owned by the government of Dubai, and Etihad is owned by the government of Abu Dhabi.

Monday's memorandum of understanding involves Emirates unit Emirates Group Security and Etihad parent Etihad Aviation Group working "together on operational areas both within and outside the UAE," according to an Emirates statement.

The agreement was signed by Emirates President Tim Clark and Etihad's new Group Chief Executive Tony Douglas.

Clark told Reuters on Oct. 11 that Emirates was open to working with Etihad, including on procurement.

"I think there is value to be had working more closely with them," Clark said in October.

Emirates and Etihad face common challenges; a lobbying campaign in the United States to investigate accusations that they are unfairly state subsidised, which they both deny, as well as overcapacity, security concerns, and a drop in regional business travel.

Under Monday's agreement, Emirates Group Security will provide security and training programs to Etihad, and help develop their security escort capability.

An Emirate is the largest Middle East airline, and the younger Etihad had unsuccessfully spent billions trying to catch up by buying stakes in more than half a dozen operators around the world. Its most high-profile investments, Air Berlin and Italy's Alitalia, filed for administration last year and contributed to Etihad falling into the red in 2016 for the first time since 2010.

Emirates started developing closer ties with fellow Dubai state-owned carrier flydubai last year.