Business | Aviation

Etihad traffic, revenue up sharply

Airline eyes break-even this year as passenger numbers rise by 500,000

  • By Samia Badih, Staff Reporter
  • Published: 00:00 April 4, 2012
  • Gulf News

  • Image Credit: WAM
  • James Hogan highlighted the importance of Etihad’s partnership strategy in boosting passenger numbers. Etihad will take delivery of seven new aircraft this year — three Airbus A320s and four Boeing B777s, with the first three-class B777-300ER deployed on the London route from July.

Abu Dhabi: UAE flag carrier Etihad Airways yesterday announced a 28 per cent increase in revenue to $989 million (Dh3.63 billion) for its first quarter of 2012, over the same period in 2011, with passenger numbers soaring by 500,000 to 2.4 million.

"Despite the tough econ-omic times we believe our business model of organic network growth combined with codeshare partnerships and strategic equity investments will enable us to continue to prosper and ensure sustainable profitability," Etihad Airways president and chief executive officer James Hogan said yesterday.

The airline expects to generate $5 billion in revenues this year and to be profitable over the year, Hogan told reporters in Abu Dhabi yesterday.

Hogan highlighted the importance of Etihad's partnership strategy in boosting passenger numbers in the first three months of the year. The airline has acquired stakes in airberlin, Europe's sixth biggest carrier, and Air Seychelles within the last four months.

Equity investments

"Our equity investments, in airberlin and Air Seychelles, are already bearing fruit and we are starting to see both revenue and cost benefits from synergies with each carrier," he said, adding that what the carrier has done with Air Seychelles may be a model for some of the smaller carriers.

In January Etihad Airways took a 40 per cent stake in Air Seychelles, enabling it to renew its fleet and take advantage of Etihad Airways' extensive global route network, maximise efficiencies and boost sales opportunities.

"We are flying with fuller planes across the network and our codeshare partnerships played a major role in this growth, accounting for 18 per cent of our revenues in the quarter."

It is however, unclear how much benefit the airline gained from the alliances with the two airlines in the first quarter.

"While it's too early to decipher how much of that is attributable to airberlin, it's likely that the next quarter for Etihad will be an even stronger showing," said Saj Ahmad, chief analyst at StrategicAero Research. "That said, the carrier is increasing its GCC presence and looks like it will sit out the need for a low-cost arm," he added.

Etihad will take delivery of seven new aircraft this year — three Airbus A320s and four Boeing B777s, with the first three-class B777-300ER deployed on the London route from July, the airline announced, increasing its fleet to 71 aircraft by year's end.

New routes

The airline said revenue passenger kilometres (RPKs) rose during the first quarter by 26.6 per cent to 10.9 billion, thanks to growth in available seat kilometres (ASKs) through new routes, additional frequencies, increased seat capacity and strengthening load factors. Seat factor jumped by 3.8 percentage points to 76.5 per cent, the highest first quarter level in the airline's history.

Rising fuel costs have had a major impact on the aviation sector. In March, Etihad Airways increased the fuel surcharge on its European flights to offset the costs being imposed on the airline by the European Union (EU) Emissions Trading Scheme (ETS).

The International Air Transport Association (IATA) recently said that rising oil prices and Europe's sovereign debt crisis were hanging over the airline industry's fortunes.

"Fuel prices are our largest variable cost and they are tracking higher than 2011. We remain committed to an active fuel hedging strategy. Eighty per cent of our first quarter's fuel costs were hedged and we currently have 74 per cent of fuel costs hedged for the rest of 2012," Hogan said.

Cargo revenues gain

Despite an industry-wide slowdown in air freight markets, Etihad Cargo's revenues went up 12.2 per cent to $159 million.

The airline said volumes had been strong, load factors increased and it continued to adjust freighter flying to meet customer needs. "On the strength of our success, two new freighters were ordered in the first quarter for delivery in 2013 and 2014," Hogan said.

"Etihad has produced some good numbers despite increase in fuel costs — their launching of new routes and induction of new fuel-efficient jets like the 777-300ER will put them in good stead towards profitability this year," Ahmad told Gulf News.

Etihad also announced its plans for the expansion of its global network over the next 18 months, including a daily service to the airline's first South America destination and a new service to Vietnam.

While the first destination is still being finalised, the airline said its first South American flights would begin towards the middle of next year.

Etihad Airways also planned to replicate the success of its European expansion by introducing additional frequencies to a range of other destinations in Asia and Australia.

In the first quarter of this year, Etihad Airways announced the launch of non-stop daily flights to Washington, D.C., began flights to Tripoli, Shanghai and Nairobi, and will soon start services to Basra and Lagos, as well as increase flight frequencies to Duesseldorf, Bangkok, Cairo, Kuwait and Dammam. Extra capacity will also be added to routes including London's Heathrow and Kuala Lumpur, the airline said.

Clarity sought

Etihad Airways, which is due to get its first Airbus A380 superjumbo in 2014, said it wants more clarity from the planemaker about wing cracks on the aircraft.

European air safety regulators ordered checks in February for Airbus A380 wing cracks for the entire superjumbo fleet after safety engineers found cracks in almost all the planes inspected.

"Obviously we are very concerned about this defect. They have given us assurances that they've been rectified... we need them to be qualified," Etihad president and CEO James Hogan told reporters at the company's Abu Dhabi headquarters.

Larger rival Emirates, the world's largest operator of the A380, said in March it planned to seek compensation from Airbus after complaining of widespread disruption and an expected loss of revenue.

Etihad has an order for 10 Airbus A380s pending, with the first due for delivery at the end of 2014.

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