Dubai: Etihad Airways-backed Italian airline Alitalia said on Friday it is on track to return to profitability in 2017 after cutting its losses by 65 per cent last year.

Italy’s national carrier is in the midst of a three-year turnaround led by Etihad after the Abu Dhabi carrier bought a 49 per cent stake in a €1.7 billion deal in late 2014.

On Friday, Alitalia said it lost €199.1 million (Dh833.3 million) in the 12 months to December 31, compared to €578 million in the previous year. Revenues rose 3.8 per cent to €3.3 billion, according to an emailed statement.

Alitalia chairman Luca Cordero di Montezemolo said few airlines have been able to achieve the “radical change” that Alitalia has undergone.

“Return to profitability in 2017 remains our goal. Today’s results show that Alitalia has become more efficient in controlling costs and is on track for profitability by 2017.  All our efforts are focused on reaching that target,” he said in the statement.

The reduction in full-year losses came in a difficult year for the airline. A fire as its hub at Rome’s Fiumicino airport in May is estimated to have cost the airline around €80 million, Alitalia said. And like many European carriers, Alitalia saw a negative impact on passenger traffic following the November terrorist attack in Paris.

However, Alitalia said it “met or exceeded a wide range of performance indicators” in 2015.

It carried 22.1 million passengers, down 1.5 per cent, but improved its load factor by 0.3 per centage points to 76.2 per cent. The airline had a fleet of 122 aircraft in 2015, three less than the previous year.

Alitalia and Etihad saw 450,000 passengers on shared codeshare flights while there were over 1.2 million passengers traveling on codeshare flights between Alitalia and Etihad Airways Partners, a group of carriers partly owned by Etihad.

In 2015, the airline’s chief executive Silvano Cassano departed in the third quarter after less than a year in the job, citing personal reasons. Cramer Ball, who has headed Jet Airways and Air Seychelles, has since been appointed to the position. Jet Airways and Air Seychelles are both minority owned by Etihad. Ball has also worked at Etihad.

This year, Alitalia will spend €400 million on its fleet, cabins, technology and infrastructure, which Ball said would be the airlines “most important investment to date.”

“There is still much to do to reach our long- term goals, but this year has seen our team achieve many significant milestones,” he said in the statement. 

Alitalia is ready to face “many macro-economic challenges,” Ball said without elaborating. 

Italy’s government this month cut its growth forecast for 2016 and 2017 to 1.2 percent and 1.4 per cent, respectively, down from the previous forecasts of 1.6 per cent for both years.

The International Monetary Fund cut its global growth forecast this month citing tense conditions around the world including fraying political and economic ties in Europe. The IMF now expects the global economy to expand by 3.2 per cent this year, down 0.2 percentage points from its previous forecast.

Air Berlin, also partly owned by Etihad, reported on Thursday a €447 million loss for 2015 due to fuel hedging losses and restructuring costs. On Wednesday, Etihad reported a $103 million (Dh378.3 million) consolidated net profit for 2015 off the back of stronger passenger growth.