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Etihad Reports Loss of $1.87 Billion as it Indefinitely Postpones Cabin Crew Recruitment for ‘Operational Requirements’

Etihad Reports Loss of $1.87 Billion as it Indefinitely Postpones Cabin Crew Recruitment for ‘Operational Requirements’

Etihad Reports Loss of $1.87 Billion as it Indefinitely Postpones Cabin Crew Recruitment for 'Operational Requirements'

It would be difficult to imagine a situation that could possibly be worse for Etihad Airways.  Today, the Abu Dhabi-based airline revealed its financial results for 2016 and the figures make for awful reading.  In total, Etihad recorded a massive loss of $1.87 billion USD with the airline’s interim chief executive saying the airline would “implement changes across the group as part of a comprehensive strategic review.”

The awful financial results come just a couple of days after the Etihad recruitment team postponed a series of cabin crew Assessment Day’s they had intended to hold in August.  An email had been sent to shortlisted candidates saying the events had been delayed due to ‘Operational requirements’.  The email went onto say that Etihad had no further Assessment Day’s planned.

So what does this mean for cabin crew recruitment?  Well, it sounds like it could be really bad news.  Airlines in the Middle East routinely use the term ‘operational requirement’ or ‘operational reason’ when they don’t want to go into detail about something that will make them look bad.

It was immediately clear from the outset that Etihad’s recruitment team didn’t postpone these Assessment Day’s because of some minor technical difficulty.  But exactly why Etihad would initially start the recruitment process only to then end it so abruptly remained a mystery.

It has to be said that unlike some other airline’s in the region, Etihad is normally a little more professional when it comes to communicating with candidates.  It looks like whatever has happened has taken everyone by surprise.  But a really good clue came from senior leaders at the airline who were speaking about the airline’s losses.

The email sent by Etihad to shortlisted candidates
The email sent by Etihad to shortlisted candidates

Ray Gammell, the airline group’s acting CEO has said Etihad would now start focusing on “reducing costs” and this could well mean cutting staff numbers even further.  We already knew Etihad has made some staff redundant but so far this hadn’t affected cabin crew.  Now it looks like the airline will be going much further.

“During 2016, the airline commenced a Right Size & Shape programme that generated total overhead savings of 4% through headcount reductions and other measures,” commented Gammell.  He went on to say that Etihad had achieved this even as capacity and passenger numbers increased.

  • Net loss of $1.87 billion USD
  • Revenues of $8.36 billion USD
  • Passenger revenues $4.9 billion USD
  • 18.5 million passengers carried with 79% load factor
  • $808 million USD lost to equity partners (mainly Alitalia and airberlin)

Gammell has worked at Etihad since 2009 as head of people and performance but in July he took over from James Hogan as the chief executive of the Etihad Airways Group.  Hogan was forced out of the company following a series of disastrous deals that included Etihad racking up huge losses from its ‘equity investments’ in foreign airlines including near bankrupt, Italian airline Alitalia.

Meanwhile, Peter Baumgartner, the chief executive of the airline couldn’t have sounded more pessimistic if he tried: “We are in an industry characterised by overcapacity, declining market sizes on key routes, and changing customer behaviour as a weak global economy affects spending appetite.”

Yet, it’s not all bad news.  Both Baumgartner and Gammell remained positive about Etihad’s long-term success.  Baumgartner said Etihad would face up to these threats through “innovation and reinvention” giving Etihad “a competitive edge.”  While Gammell noted: “Our airline business remains strong and class-leading, and as an aviation group, we are in a stronger position.”

Of course, none of this answers exactly why Etihad initially advertised for new cabin crew only to then let down so many shortlisted candidates.  And then, of course, there are successful candidates who have waited nearly a year to join the airline.  The news must be devastating for so many people.  Sadly, it looks like Etihad is about to start a major restructuring exercise – How long this process might take is too difficult to guess.

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