business / aviation

Etihad reports operating losses of $758m in first-half 2020

Revenues and passenger numbers were severely crimped by COVID-19 crisis

All those aircraft on the ground meant a constant burden on the Abu Dhabi carrier's 2020 first numbers.
Image Credit: Gulf News Archive

Dubai: Abu Dhabi’s Etihad carried 3.5 million passengers in the first six months, compared with 8.2 million a year ago, as the pandemic grounded fleets.

This resulted in operating losses of $758 million with revenues hit due to the closure of international borders, and the suspension of flights to halt the spread of the COVID-19 virus. It had a loss of $586 million in the same period last year.

Passenger revenues for the first-half totalled $1.01 billion, while cargo added another $490 million. (The seat load factor through this period was at 71 per cent.)

Operating revenues totalled $1.67 billion, but with a 38 per cent drop from a year ago.

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“Etihad faced a set of enormous and unpredictable challenges in the first six months of the year,” Etihad CEO Tony Douglas said in a statement. "By September, we aim to increase our worldwide flights to half our pre-COVID-19 capacity.

“While we have revised our outlook for the rest of 2020 based on current realities, we remain optimistic that as international borders re-open, we will increase our flying and carry more guests securely."

The cargo business did well, with a surge in demand along with a spike in tariffs driving a 37 per cent jump in revenues to $490 million.

Letting go

Etihad said it was forced to “redesign the organization around” the need to make redundancies across several areas of the business. Temporary company-wide salary cuts of 25-50 per cent was introduced earlier.

“We have had to make some extremely difficult decisions to reduce the size of the workforce by several thousand," said Douglas. "Those who have departed Etihad have done so with incredible dignity and their contribution has been immeasurable.”

We rest assured that the UAE is leading the way in the research for a vaccine against COVID-19. The incredible efforts Abu Dhabi is making to ensure the safety and security of its residents and visitors will soon enable us to welcome the world back

- Tony Douglas of Etihad Aviation Group

A strong start

What would be terribly galling for the airline and its owners is that the year had started strong, with its numbers for February proving exceptionally strong.

Adam Boukadida, Chief Financial Officer at Etihad Aviation Group, confirmed as much, “By the end of the first quarter, the airline was on track to achieve a 2020 EBITDA of $900 million (against $453 million in 2019).

“Etihad managed to maintain a satisfactory level of liquidity despite a major drop in revenues, while continuing to raise new liquidity facilities supported by local and international financial institutions. This was supported by maintaining an ‘A with a stable outlook’ Fitch rating in April, at the height of the pandemic.

“Etihad was one of a small number of airlines to maintain its pre-COVID-19 credit rating.”

A greater emphasis is being placed on a drive towards increased cost optimisation. Our suppliers and partners have worked closely with us, including the arrangement of payment holidays with lessors and savings discussions with all of our supply chain

- Adam Boukadida at Etihad Aviation Group