Etihad Airways announces 32% improvement in core operating performance
Etihad Airways has announced an encouraging 32% improvement in core operating performance for 2019, on revenues of US$ 5.6 billion (2018: US$ 5.9 billion). Losses were significantly reduced to US$ 0.87 billion (2018: US$ -1.28 billion). This result is better than Etihad’s internal plan for 2019. The airline’s transformation program has seen cumulative core operating performance improved by 55% since 2017.
Passenger routes were rationalized at the end of 2018 to optimize the network and improve revenue quality. However, passenger demand to and from Etihad’s ten gateways in India remained strong, despite the removal of capacity and feeder services previously provided through Jet Airways, and the airline added seats in these markets early in 2019.
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 Kilometers (ASK)) of 6% (from 110.3 billion to 104.0 billion). Yields increased by 1%, largely driven by capacity discipline, network and fleet optimization and growing market share in premium and point-to-point markets. Due to the capacity reduction, passenger revenues slightly decreased to $4.8 billion (2018: $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 tons (2018: 682,100 tons), with total revenues of $0.70 billion (2018: $0.83 billion). This decline is mostly attributable to the full-year effect of belly-hold and freighter capacity rationalization 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.
Total operating costs were significantly reduced, driven by a continuous focus on cost control and favorable fuel price trend. Financing costs remained flat despite the delivery of new aircraft to the fleet.
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 optimization. An improvement to the cost base significantly offset the cost pressures faced by the business, giving us 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 vigor and determination to push ahead and implement the changes needed to continue this positive trajectory.”
On-time performance was the best in the region at 82% for flight departures and 85% for arrivals in 2019, completing 99.6% of scheduled flights across its network.
In 2019, Etihad continued its fleet renewal program 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.
Etihad’s global route network stood at 76 destinations at the end of 2019. Frequencies were increased on key routes such as London Heathrow, Riyadh, Delhi, Mumbai, and Moscow Domodedovo. The Airbus A380 was introduced on Seoul flights and the Boeing 787 Dreamliner was introduced to Hong Kong, Dublin, Lagos, Chengdu, Frankfurt, Johannesburg, Milan, Rome, Riyadh, Manchester, Shanghai, Beijing and Nagoya.
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 travelers 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 program. 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.