Abu Dhabi: Etihad Airways reported a net profit of $62 million (Dh227.5 million) for 2013, marking a 48 per cent increase over the previous year’s $42 million net profits. Meanwhile, the airline’s total revenue went up 27 per cent to reach $6.1 billion.
This marked the third successive year of net profitability in the airline’s tenth year of operation.
The announcement came at a press conference held on Monday where Etihad President and Chief Executive Officer, James Hogan attributed the growth to the airline’s strategy of combining organic growth with wide partnerships, and equity investments in various global carriers.
He described the 2013 results as “outstanding performance,” especially against fierce competition, and a challenging economic and geopolitical environment.
“We have hit every financial target for each of the last seven years, bringing sustainable profitability to a business which has grown from just $300 million in revenues in 2005 to more than $6 billion today,” Hogan said.
Despite such figures, John Strickland, director of UK-based aviation advisory, JLS Consulting, said, “It’s good to see profit growth from Etihad but this does not yet reflect sustainable levels of long term profitability. However, it’s encouraging against the background of fleet and route growth and investments which the company is engaged in.”
Revenue passenger numbers were also up by 12 per cent to reach 11.5 million.
Additionally, Etihad Airways’ cargo revenues rose by 30 per cent to $928 million on volumes up from 367,837 to 486,753 tonnes.
“We have identified cargo as a major growth opportunity for Etihad Airways and its partners, and this will be a billion dollar business in 2014,” Hogan said.
Partnerships
Etihad’s partnership strategy was among the key drivers for growth in 2013 as it delivered revenues of $820 million, and represented 21 per cent of the total passenger revenues.
“Our codeshare partnerships have been an important part of our business performance for the last seven years. But it is our equity investments which are really taking off now, allowing us to build integrated networks and schedules, develop common products and services, and most importantly, identify business and cost synergies,” Hogan added.
As well as increasing revenue opportunity, the 2013 investments and partnerships enabled the company to reduce costs and increase productivity.
Etihad Chief Financial Officer, James Rigney, commented on costs, saying that fuel has been the biggest one. With $2.2 billion spent on fuel last year, it represented just under 40 per cent of the company’s total expenses.
Etihad currently owns stake in Air Serbia (49 per cent), Air Seychelles (40 per cent), Virgin Australia (19.9 per cent), airberlin (29 per cent), and Aer Lingus (three per cent). The national airline has also recently received regulatory approval to acquire a 24 per cent stake in India’s Jet Airways.
With a focus on stakes mostly in western-based airlines, Etihad has not considered any investments in Middle Eastern airlines.
Considerable potential
David Bentley, Principal at UK-based aviation consultancy, Big Pond Aviation, said the Jet Airways stakes present “considerable potential,” albeit with some dangers.
“Like many Indian airlines, Jet [Airways] has recently been a loss maker and has a lot of debt, which the 24 per cent equity sale to Etihad set about reducing. India has massive potential but the airlines rarely seem to get close to realising it,” Bentley told Gulf News in an emailed statement.
In 2014, Etihad Airways plans to introduce 18 new aircraft, including its first Boeing 787-9 Dreamliner, and Airbus A380 super jumbo, both of which are scheduled for delivery during the fourth quarter of the year.
As for the outlook for the market this year, Hogan said, “The global market remains challenging in 2014 but the macroeconomic picture is improving in key economies around the world.”
With six new destinations in 2013, Etihad has announced nine new destinations for 2014 — Los Angeles, Dallas, Rome, Zurich, Jaipur, Perth, Phuket, Madinah, and Yerevan.
