Etihad posts another massive loss

June 15, 2018
Etihad bomb suspect death
Photo: Etihad.

Gulf carrier Etihad has posted another massive loss amid reports it is talking to Boeing about deferring or canceling 777X orders.

The Abu Dhabi-based carrier said its core airline produced a loss of $US1.52 billion in 2017 as it faced significant fuel cost increases, the entry into administration of equity partners Alitalia and airberlin and investment in a restructuring program.

It was the troubled airline’s second consecutive year of major losses.

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The unaudited result came as passenger numbers rose slightly to 18.6 million and the load factor fell marginally to 78.5 percent.

The airline, which has been attacked by US carriers for publishing incomplete and unaudited results, changed its 2017 focus to look at airline operating results before extraordinary or one-off items.

Core airline results for 2016 were also restated to show a like-for-like comparison and put the loss for that year at $US1.95 billion with revenue, including cargo, at $US5.9 billion.

This compared to Etihad’s report last year of a group net loss of $US1.87 million, including $US1.9 billion in impairments. The impairments included a $1.06 billion charge on aircraft, reflecting lower market values and the retirement of some aircraft types, and $US800 million in charges mainly relating to Alitalia and airberlin.

According to this year’s restated figures, the airline improved its core operating performance by 22 percent in 2017, reducing losses by $US432 million, while combined cargo and passenger revenue crept up $US200m to $US6.1bn.

Etihad attributed the reduced loss to improved passenger and cargo yields as a result of capacity discipline and network changes with an increased focus on point-to-point travel.

Read: Etihad cuts Perth and Edinburgh to boost profits.

Unit costs were also down 7.3 percent, despite a $US337m rise in fuel costs, and administration and general expenses fell 14 percent compared to 2016.

“We made good progress in improving the quality of our revenues, streamlining our cost base, improving our cash-flow and strengthening our balance sheet,’’ new group chief executive Tony Douglas said.

“These 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. I would like to thank our people for their hard work and dedication in 2017.

“It is crucial that we maintain this momentum, retaining talent and attracting leading professionals from around the world to work alongside our highly-skilled UAE national workforce.”

Reuters reported this week that Etihad was exploring options with Boeing to cancel or defer its 777X deliveries.

The newswire quoted unnamed sources as saying airline management believed it no longer needed all 25 777X jets and could be willing to incur penalties for cancellations rather than be saddled with future recurring losses stemming from overcapacity.