Etihad Airways posted a loss of $1.28 billion for 2018. This was the airline’s third annual loss in a row. Even though Etihad tried to cut costs, the results for 2018 are not looking good at all.
What are the details?
Etihad has been struggling for a while. The airline recorded losses of $2 billion in 2016, of $1.5 billion in 2017, and now $1.28 billion for 2018. Even though the numbers for 2018 are not good, they are actually better than those for the previous two years.
According to the airline, it “improve[d] [its] core performance in 2018 as transformation continue[d].” Etihad implemented a five-year transformation program in 2017. This program has allowed Etihad to improve its core operating performance by as much as 34% since 2017.
Let’s take a look at some of the numbers published by the airline.
Etihad carried a total of 17.8 million passengers with a load factor of 76.4% in 2018. Nonetheless, these numbers are down compared to 2017 (18.6 million passengers and a load factor of 78.5%). At the same time, the airline was able to increase passenger yields by 4%. This increase was mostly due to fleet and network optimizations as well as a growing market share in some point-to-point and premium markets.
While its passenger revenues remained steady at $5 billion, the airline was able to cut total costs by $416 million. Additionally, the airline reduced direct operating costs by 3.6% ($226 million). This cost reduction was realized despite an increase in fuel cost.
Furthermore, the airline discontinued service on some unprofitable routes including Dallas/Fort Worth, Ho Chi Minh City, Edinburgh, and Perth.
What did Etihad’s CEO say?
Etihad’s CEO, Tony Douglas, stated “In 2018, we continued to forge ahead with our transformation journey by streamlining our cost base, improving our cash-flow and strengthening our balance sheet. Our transformation is instilling a renewed sense of confidence in our customers, our partners and our people. As a major enabler of commerce and tourism to and from Abu Dhabi, we are intrinsically linked to the continued success of the emirate.”
It seems like Etihad is having a really hard time turning things around. The airline made some bad investments when it invested in foreign carriers including Alitalia and Air Berlin. Both these airlines had to file for bankruptcy. These investments, however, are a thing of the past.
At this time, it appears that Etihad’s operation is simply not profitable even though the airline is trying to cut costs. The airline laid off 50 pilots in January and canceled aircraft orders in February.
Nevertheless, we will see what else the airline will try to do to become profitable again.
Will Etihad be able to return to profitability? What can the airline do to improve its numbers? What do you think?