Etihad Airways expects demand to rise as losses halve within the first half of the yr
An Etihad Airways Airbus A321 aircraft that delivered medical supplies to fight Covid-19 from the United Arab Emirates at Grozny International Airport in Russia.
Yelena Afonina | TASS | Getty Images
DUBAI, United Arab Emirates – Etihad Airways of Abu Dhabi predicts a “wave of demand” after reducing its operating loss to $ 400 million in the first half of the year and cutting costs by nearly 30%.
Etihad said the results reflect a “progressive recovery” across the company after the airline posted a $ 800 million loss in the same period a year ago when the pandemic struck global aviation and lockdown global economies .
“Etihad Airways is making up lost ground every day,” said Tony Douglas, group chief executive officer, in a statement on Tuesday.
“While the Delta variant curveball is disrupting the global air travel recovery, we have continued to ramp up operations and are in a much better place today than we were at that time in 2020,” he added.
Etihad, which is wholly owned by the Abu Dhabi government, said passenger revenue fell to around $ 333 million, a 68% decrease from the previous year’s $ 1 billion. The airline blamed “new variants of the coronavirus that affect important travel markets on the Indian subcontinent and in Europe”.
The slump in passenger revenue was offset by the cargo operations, which saw revenue jump 56% year-over-year to $ 800 million.
“Although market demand has recovered more slowly than expected, our record freight performance has continued to fuel business,” said Adam Boukadida, Chief Financial Officer of Etihad Airways. “While the pandemic still poses challenges, Etihad is on track to become a sustainable and profitable company.”
Years of losses
The airline of the capital of the United Arab Emirates has suffered losses for years. Etihad lost a total of $ 5.62 billion between 2016 and 2020 when it aggressively acquired stakes in European and Asian airlines to take on rivals Qatar Airways and Dubai’s flagship carrier, Emirates.
The full year loss for 2020 was $ 1.7 billion as airline revenues plummeted across the board and companies were forced to land planes while the pandemic brought travel to a standstill.
The last profit on record for Etihad was in 2015 when the company announced net profits of $ 103 million. However, that figure has been denied in a report by the Partnership for Open and Fair Skies and several US airlines, which complained of unfair competition because of the high government subsidies Etihad receives.
Demand “waiting to be unleashed”
Etihad said it reduced operating costs by 27% year over year from $ 1.9 billion to $ 1.4 billion in the first half of 2021, aided by reduced capacity and volume-related spending. The airline said cuts in its fixed costs and financing costs have also helped restore its liquidity position to pre-pandemic levels.
“As soon as travel destinations are put on the Abu Dhabi green list or the UAE’s travel corridors, in some cases we see bookings increasing by three to six fold, which shows that a tidal wave of demand is waiting to be unleashed,” said Douglas.
The airline carried one million passengers in the first half of the year, up from 3.5 million in the first half of 2020. Etihad said it operated nearly 3,500 flights per month to 67 passenger and cargo destinations as of the end of June.
Worst year on record
The results come after the “worst year on record” for global air traffic, according to the International Air Transport Association (IATA).
“At the height of the crisis in April 2020, 66% of the world’s commercial air transport fleet was idle because governments closed borders or imposed strict quarantines,” IATA director general Willie Walsh said in a statement last week.
The latest statistics from IATA show the industry lost 1 million jobs and the industry lost $ 126 billion.