NE BUSINESS BUREAU
ABU DHABI (UAE), MARCH 7
Abu Dhabi’s national carrier Etihad on Thursday reported losses of $870 million in 2019 after losing billions in recent years, calling the result “encouraging.” In 2018, it reported a whopping $1.28 billion loss. However, it reported an encouraging 32% improvement in core operating performance for 2019, on revenues of US$ 5.6 billion (2018: US$ 5.9 billion). This result is better than Etihad’s internal plan for 2019. The airline’s transformation programme has seen cumulative core operating performance improved by 55% since 2017.
Etihad carried 17.5 million passengers in 2019 (2018: 17.8m), with a 78.7% seat load factor (2018: 76.4%) and a decrease in passenger capacity (Available Seat Kilometres (ASK)) of 6% (from 110.3 billion to 104.0 billion).Due to the capacity reduction, passenger revenues slightly decreased to US$ 4.8 billion (2018: US$ 5 billion), but route profitability improved.
Etihad Cargo remained committed to its transformation strategy in 2019, despite challenging market headwinds. Total cargo handled stood at 635,000 tonnes (2018: 682,100 tonnes), with total revenues of US$ 0.70 billion (2018: US$ 0.83 billion). This decline is mostly attributable to the full-year effect of belly-hold and freighter capacity rationalisation undertaken in the fourth quarter of 2018, combined with adverse market conditions that resulted in yields dropping by 7.8%. Despite strong cost control, cargo profit contribution was lower year-on-year. Underlying transformation results were visible in the fourth quarter, having recorded a 5.6% increase in FTKs over the same period in 2018, with 1.7 percentage points higher load factors.
Tony Douglas, Group Chief Executive Officer, Etihad Aviation Group, said: “Operating costs were reduced significantly last year and both yields and load factors were increased despite passenger revenues being down due to network optimisation. An improvement to the cost base significantly offset the cost pressures faced by the business, giving us the headroom to invest in the guest experience, technology and innovation, and our major sustainability initiatives.
“There’s still some way to go but progress made in 2019, and cumulatively since 2017, has instilled in us a renewed vigour and determination to push ahead and implement the changes needed to continue this positive trajectory.”
Operational Highlights
In 2019, Etihad continued its fleet renewal programme and took delivery of additional fuel-efficient, technologically advanced aircraft, including eight Boeing 787-9s and three Boeing 787-10s, while retiring its Airbus A330s from the mainline fleet. The airline’s fleet count at year-end was 101 (95 passenger aircraft and six cargo freighters), with an average age of only 5.3 years.
In December, Etihad signed an agreement with Seattle-based aviation finance company Altavair, and investment firm KKR, for the sale of the retired Airbus A330 fleet, and the sale and lease-back of the airline’s in-service Boeing 777-300ER aircraft.
Growth through partnerships
In October 2019, Etihad and Air Arabia announced a new joint venture named Air Arabia Abu Dhabi, which will cater to the rapidly-growing demand for low-cost travel options in the region. Air Arabia Abu Dhabi will begin operations in the second quarter of 2020 and will operate independently, complementing Etihad’s network of routes from the Abu Dhabi hub.
Etihad continued to expand its global reach through 56 codeshare partnerships, creating a wider choice for air travellers on a combined network of approximately 17,700 codeshare flights to almost 400 destinations worldwide. In 2019, Etihad signed new and expanded partnerships with Saudia, Gulf Air, Royal Jordanian, Swiss, Kuwait Airways, and PIA.
In November, Etihad and Boeing launched a first-of-its-kind ‘eco partnership’ known as the Greenliner programme. The initiative kicked off with the arrival of a specially-themed flagship Boeing 787-10 Dreamliner which will be used, along with other aircraft in the 787 fleet, and together with industry partners, to test products, procedures and initiatives designed to reduce carbon emissions.
In December, Etihad became the first airline globally to secure funding for a project based on its compatibility with the Sustainable Development Goals of the United Nations. Through a partnership with First Abu Dhabi Bank and Abu Dhabi Global Market, the airline is borrowing 100 million Euros (AED 404.2 million) to expand the Etihad Eco-Residence, a sustainable apartment complex for its cabin crew.
“The major improvement in 2019 clearly demonstrates that we’re on the right track. As part of our transformation programme, we’ve made some tough decisions to ensure we continue to grow as a sustainable global aviation enterprise and brand, and a worthy representative of the great emirate of Abu Dhabi, to which Etihad is intrinsically linked,” concluded Douglas.
