Eti­had nar­rows an­nual loss as rev­enues im­prove

The National - News - - BUSINESS - DEENA KAMEL

Eti­had Air­ways will fo­cus on point-to-point traf­fic serv­ing its Abu Dhabi hub after nar­row­ing an­nual losses to $1.52 bil­lion (Dh5.58bn) amid a ma­jor turn­around plan.

The state-owned air­line will con­tinue to mon­i­tor ca­pac­ity and re­view its route net­work after post­ing its se­cond con­sec­u­tive full-year loss, it said in a state­ment on Thurs­day.

Ris­ing oil prices could pro­vide a boon to its home base and boost the air­line’s cor­po­rate book­ings.

Eti­had has im­proved rev­enues and cash flow, but the mea­sures are “solid first steps in an on­go­ing jour­ney to trans­form this busi­ness into one that is po­si­tioned for fi­nan­cially sus­tain­able growth over the long term”, said Tony Dou­glas, chief ex­ec­u­tive of­fi­cer of Eti­had Avi­a­tion Group, who joined in Jan­uary.

The Abu Dhabi air­line is un­der­go­ing a struc­tural and strat­egy change amid a com­pany-wide re­view as it backs away from a growth pol­icy of buy­ing mi­nor­ity stakes in global air­lines.

Last year, it with­drew from trou­bled Air Berlin and Al­i­talia, which filed for in­sol­vency.

Halv­ing the num­ber of its eq­uity hold­ings, it has over­hauled the busi­ness by ap­point­ing a new chief ex­ec­u­tive, scrap­ping un­prof­itable routes and slash­ing costs after it made a loss of al­most $2bn in 2016.

In 2017, the air­line’s losses re­sulted from a “sig­nif­i­cant” in­crease in its fuel bill, an in­vest­ment into its re­struc­tur­ing pro­gramme and loss in busi­ness from its for­mer eq­uity part­ners Al­i­talia and Air Berlin, it said.

Last year’s core air­line losses nar­rowed by 22 per cent as sales in­creased by 1.9 per cent to $6.1bn and costs dropped by 7.3 per cent.

It re­duced ca­pac­ity, re­placed older jets with more fuel-ef­fi­cient planes and fo­cused on the more prof­itable point-to-point routes.

The com­pany’s earn­ings re­flected the air­line unit’s core op­er­a­tions and ex­cluded one-time items. It did not pro­vide a net fig­ure or re­sults for other units within the Eti­had Avi­a­tion Group.

Eti­had car­ried 18.6 mil­lion pas­sen­gers, lit­tle changed from the previous year, while its load factor – a mea­sure of seats filled – de­clined slightly to 78.5 per cent.

Its ca­pac­ity growth was reined to one per cent as its ex­pan­sion plans were re­viewed and pas­sen­ger yields – an in­di­ca­tor of air fares – rose nine per cent in the fourth quar­ter.

A jump in oil prices, which hit $80 a bar­rel in re­cent weeks, could be an op­por­tu­nity to lift cor­po­rate travel de­mand and im­prove pre­mium book­ings but also means an in­crease in fuel costs.

“We made sig­nif­i­cant progress in driv­ing im­proved per­for­mance and we are on track in 2018,” said Mo­hamed Al Mazrouei, the chair­man of the board of Eti­had Avi­a­tion Group.

Eti­had took de­liv­ery of 12 new air­craft in 2017, in­clud­ing two Air­bus A380s and

We made sig­nif­i­cant progress in driv­ing im­proved per­for­mance and we are on track

MO­HAMED AL MAZROUEI Chair­man, Eti­had Avi­a­tion Group

nine Boe­ing 787-9 Dream­lin­ers, which re­placed older Air­bus A340, A330 and A319 jets.

The air­line halted ser­vices to Dal­las-Fort Worth, En­tebbe, Jaipur, San Fran­cisco, Tehran and Venice last year amid its net­work re­view.

It started a ser­vice to Baku in March and will be­gin flights to Barcelona in Novem­ber.

Emi­rates has said it is exploring ways for closer co-op­er­a­tion with Eti­had with­out flout­ing com­pe­ti­tion rules.

The UAE air­lines could con­sider joint pur­chases and shar­ing fa­cil­i­ties in coun­tries they both serve, Emi­rates chair­man Sheikh Ahmed bin Saeed Al Mak­toum said.

Eti­had is open to col­lab­o­ra­tion with Emi­rates where there is mutual ben­e­fit, Mr Dou­glas said in April.

It will take a sus­tain­able ap­proach to ex­pan­sion and will not be­come a bou­tique air­line, he said.

Reuters

Eti­had is un­der­go­ing a struc­tural and strat­egy change

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