Etihad registers dip in cargo revenue

Jul 28, 2017: Etihad Airways has announced its 2016 financial results, recording a net loss of $ 1.87 billion on US$ 8.36 billion in revenues as one-off impairment charges and fuel hedging losses weighed against a solid performance of the core airline.

A slowdown in the cargo market put increased pressure on cargo revenues and yields. Cargo revenue for 2016 stood at $0.9 billion against $1.0 billion in 2015. And the airline saw a slight improvement in freight carried at 595,519 tonnes for the 12-month period.

The core airline business achieved steady passenger revenues of $4.9 billion and 79 percent load factors while carrying a record 18.5 million passengers. Available seat kilometers (ASKs) increased by 9 percent to 113.9 billion. Yields fell 8 percent amid market capacity pressures and the tough global economic climate, but this was partially offset by an 11 percent reduction in unit costs.

Total impairments of $1.9 billion included a $1.06 billion charge on aircraft, reflecting lower market values and the early phase out of certain aircraft types. There was also a $808 million charge on certain assets and financial exposures to equity partners, mainly related to Alitalia and airberlin.

Legacy fuel hedging contracts also had a negative bearing on performance in 2016, though this exposure is expected to have less of a financial impact during 2017.

Mohamed Mubarak Fadhel Al Mazrouei, chairman of the Board of the Etihad Aviation Group, said, “A culmination of factors contributed to the disappointing results for 2016. The Board and executive team have been working since last year to address the issues and challenges through a comprehensive strategic review aimed at driving improved performance across the group, which includes a full review of our airline equity partnership strategy. The record passenger numbers in 2016 affirm Etihad’s role as a significant economic enabler for Abu Dhabi, and our airline business continues to support Abu Dhabi’s vision to develop tourism, grow commerce and strengthen links to key regional and international markets.”

“We are in an industry characterised by overcapacity, declining market sizes on key routes, and changing customer behaviour as a weak global economy affects spending appetite. Our answer to these challenges is innovation and reinvention, and this gives Etihad Airways a competitive edge as we seek to leverage opportunities offered to us by a changing environment. “Operationally, we performed well in 2016. We maintained load factor levels even as we increased capacity. Yields were under pressure in all cabins, with Business Class impacted particularly as corporate travel policies continued to encourage flyers to downgrade to Economy,” Peter Baumgartner, CEO, Etihad Airways, added.