Etihad Airways expects demand surge as first half losses halve
An Etihad Airways Airbus A321 airliner that delivered medical supplies to fight Covid-19 from the United Arab Emirates to Grozny International Airport in Russia.
Elena Afonina | TASS | Getty Images
DUBAI, United Arab Emirates – Abu Dhabi’s Etihad Airways is forecasting a “demand tidal wave” after cutting its operating loss to $ 400 million in the first half and cutting costs by nearly 30%.
Etihad said the results reflect a “gradual recovery” across the company, after the airline recorded a loss of $ 800 million in the same period a year ago as the pandemic has hit global aviation and global economies have been stranded.
“Every day, Etihad Airways is making up for lost ground,” Tony Douglas, group chief executive, said in a statement on Tuesday.
“Despite the curve of the Delta variant disrupting the global recovery of air transport, we have continued to intensify our operations and are today in a much better position than in 2020,” he added.
Etihad, which is 100% owned by the Abu Dhabi government, said passenger revenues fell to around $ 333 million, down 68% year-on-year from $ 1 billion. The airline blamed “new variants of the coronavirus affecting major travel markets in the Indian subcontinent and in Europe.”
The slump in passenger revenue was offset by its freight operations, which saw revenue increase 56% year-on-year to $ 800 million.
“While market demand has been slower than expected, our record freight performance continued to support activity,” said Adam Boukadida, Chief Financial Officer of Etihad Airways. “While the pandemic continues to pose challenges, Etihad is on the way to becoming a sustainable and profitable business.”
Years of losses
The airline in the capital of the United Arab Emirates has suffered losses for years. Etihad lost a total of $ 5.62 billion between 2016 and 2020 by aggressively buying stakes in European and Asian airlines, seeking to take on rivals Qatar Airways and Emirates, Dubai’s flagship carrier.
Its full-year loss for 2020 was $ 1.7 billion as airline revenues fell universally and businesses were forced to ground planes while the pandemic halted travel.
The last recorded profit for Etihad dates back to 2015, when it announced a net profit of 103 million dollars. This figure, however, has been disputed in a report by the Open and Fair Skies Partnership and by several US-based airlines, which have complained of unfair competition due to the large government subsidies Etihad receives.
Demand “waiting to be unleashed”
Etihad said it reduced operating costs in the first half of 2021 by 27% year-on-year, from $ 1.9 billion to $ 1.4 billion, supported by reduced capacity and volume-related expenses. The airline said the reduction in its fixed overheads and financing costs had also helped restore its liquidity position to pre-pandemic levels.
“As soon as destinations are added to the Abu Dhabi Green List or UAE Travel Corridors, we see a three to six increase in bookings in some cases, which shows that there is a tidal wave. tide of demand that’s waiting to be triggered, ”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 operates nearly 3,500 flights per month to 67 passenger and cargo destinations in the end of June.
Worst year ever
The results come after “the worst year on record” for global air transport, according to the International Air Transport Association (IATA).
“At the height of the crisis in April 2020, 66% of the global commercial air transport fleet was grounded as governments closed borders or imposed strict quarantines,” said Willie Walsh, chief executive of IATA, in a statement last week.
The latest statistics from IATA show a million jobs in the sector have been lost and industry losses totaled $ 126 billion.