Etihad Airways, Abu Dhabi’s flag carrier, plans to lay off 50 of its 2,065 pilots (2.5% of pilots) by the end of this month according to an internal memo. The airline has been struggling financially and is now trying to cut operating costs.
Etihad Airways has not reported its financial results for last year, but the memo indicates that the airline made a “significant loss” according to Reuters. Unfortunately, the outlook for 2019 is not better with further losses expected. The airline recorded a loss of $2 billion in 2016 and a loss of $1.5 billion in 2017.
At this point, Etihad is trying to cut costs by about 10% over the next year. Laying off pilots is just one piece of the puzzle. The airline also canceled its orders for 10 Airbus A320neo aircraft it had ordered in 2013.
Etihad’s original goal was to successfully compete with Emirates and Qatar Airways. However, the airline had to give up on its dreams after investments in foreign carriers, including Air Berlin and Alitalia, did not work out. As we all know, Air Berlin and Alitalia had to file for bankruptcy.
To make things worse, as Simple Flying reported last month, Air Berlin’s insolvency administrator is suing Etihad for 2 billion euros. Air Berlin claims that Etihad did not fulfil its financial obligations when it withdrew its funding to the now defunct German carrier. Etihad’s response to the lawsuit is expected by the end of January.
Changes at Etihad
Etihad has already been putting a greater focus on point-to-point routes serving Abu Dhabi and cut numerous flights that were unprofitable. But will this be enough?
The airline has also cut back on passenger amenities. It has closed its Style & Shave salons at Abu Dhabi. It has done away with its complimentary chauffeur service for most passengers. And it is no longer providing free pyjamas to business class passengers.
There have even been rumours regarding talks about a possible merger between Etihad and Emirates. Both carriers publicly denied these talks though.
This month’s pilot layoffs are not the first layoffs to hit Etihad. The airline has seen a few rounds of layoffs in recent years.
Last January Etihad asked some pilots to take up to 18 months of unpaid leave. Later in the year, Etihad started giving its pilots the opportunity to work for Emirates for two years. Emirates is believed to be in desperate need for pilots, so this is a win-win situation for both airlines. However, reportedly only a small number of pilots have taken advantage of this opportunity.
It should be relatively easy for the laid-off pilots to find new employment. After all, due to the global shortage, pilots are in high demand. But what is next for Etihad? The airline has over 100 open orders for A350s, 777s and 787s. What is going to happen to these orders?
It will definitely be interesting to see how things unfold for Etihad over the next months.
Will Etihad be able to successfully cut operating costs and turn things around? What do you think?