Etihad Airways has just released its latest financial results and yet again the Abu Dhabi-based airline has run up a huge debt. In 2018, Etihad made a loss of USD $1.28 billion on the back of $5.86 billion in revenues. The good news is that Etihad is at least reducing its losses – the airline first went into the red in 2016 when it reported a massive $1.95 billion loss. In 2017, those losses were reduced to $1.52 billion so at least Etihad’s financials are headed (slowly) in the right direction.
Operating costs were reduced to $6.9 billion but with total revenues coming in at $5.86 billion, it’s clear that there’s still a big gap that needs to be bridged.
We’ve written extensively about how Etihad got into this situation – much of the blame has been attributed to a strategy pushed by the airline’s former chief executive, the now disgraced James Hogan. The Australian airline executive unceremoniously left the airline in 2017 after a disastrous equity investment strategy that saw Etihad taking stakes in loss-making airlines like Alitalia, Air Berlin and India’s Jet Airways.
Etihad’s dramatic expansion, along with an increasingly competitive aviation market probably didn’t help matters either.
The current chief executive, Tony Douglas has started a five-year transformation plan in a bid to turn the airline around which has seen Etihad simmer its goals of worldwide domination and instead focus on becoming a regional player. In 2018, the airline announced it would be discontinuing a number unprofitable routes including Tehran, Jaipur, Entebbe, Dallas Fort Worth, Ho Chi Minh City, Dhaka, Dar es Salaam, Edinburgh and Perth.
In addition, and after much speculation, Etihad finally announced that it would cancel aircraft orders with both Boeing and Airbus worth billions of dollars at list prices. Etihad cut its Airbus order for a mix of widebody long-haul A350-900 and A350-1000 aircraft by 42 in February and similar cuts have been made with Seattle-based Boeing.
A couple of months ago, Etihad said it would be making at least 50 pilots redundant and that it was running with a surplus of around 160 pilots. In a leaked memo, the airline told its staff that “the global economic climate continues to be extremely challenging”.
“In 2018, we continued to forge ahead with our transformation journey by streamlining our cost base, improving our cash-flow and strengthening our balance sheet,” explained Douglas.
Referencing Etihad’s new strategy, Douglas continued: “As a major enabler of commerce and tourism to and from Abu Dhabi, we are intrinsically linked to the continued success of the emirate.”
Passenger numbers fell by 800,000 in 2018 and passenger capacity, measured in available seat kilometres (ASK), fell by 4% as Etihad shrinks both its network and fleet. Unfortunately, the load factor also fell to just 76.4% although passenger revenue has remained stable at $5billion which would suggest Etihad has managed to get better yields from fewer passengers which is a good sign going forward.
“At only 15 years old, Etihad is maturing as an acclaimed international airline, seizing opportunities and heading into the future as a pioneering leader,” Douglas boasted.
Late last year, the airline admitted that it had come across as too exclusive and wanted to attract a broader range of customers. Etihad launched it’s Choose Well’ campaign which focuses on offering customers paid add-on’s that improve their travel experience. There’s a particular focus on in-flight retail, as well as unbundling of services and fares, and offering new seating products like a new ‘Economy Space’ seat which is being installed across Etihad’s long-haul fleet.
Mateusz Maszczynski honed his skills as an international flight attendant at the most prominent airline in the Middle East and has been flying throughout the COVID-19 pandemic for a well-known European airline. Matt is passionate about the aviation industry and has become an expert in passenger experience and human-centric stories. Always keeping an ear close to the ground, Matt's industry insights, analysis and news coverage is frequently relied upon by some of the biggest names in journalism.