August 2014, Issue: 8 Volume: 32

Aviation

Q1 revenue up 28 per cent for Etihad Airways
May 2012135

ETIHAD Airways continued its industry-leading growth in the first quarter of 2012, with a 28 per cent rise in revenue to $989 million over the corresponding period in 2011 and passenger numbers soaring by 500,000 to 2.4 million.

Etihad Airways president and chief executive officer, James Hogan, said: “We met all our revenue targets and budget estimates in the first quarter, despite the challenging economic conditions confronting the international community.

“Despite the tough economic 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.”

The record results were announced as Hogan unveiled plans for a significant expansion of the airline’s global network over the next 18 months. These included a daily service to Etihad Airways’ first South America destination and a new service to Vietnam. Hogan said the South American flights would begin mid next year with details of the first destination now being finalised.

“This a logical next step for us and will mark the sixth continent we serve and our coming of age as a truly global airline,” he said.

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.

Hogan adds: “We continue to outperform much of the global airline industry, with spectacular growth in revenue, the number of passengers flown and freight carried. Our expanded network through organic growth and partnerships has reached a critical mass that is now powering our business forward.Our seat factor hit a record high but yields, particularly in the premium cabins,remain a challenge.”

Already in the first quarter of 2012 Etihad Airways has announced the launch of non-stop daily flights to Washington, D.C., begun flights to Basra, Tripoli, Shanghai and Nairobi, and will soon start services to Lagos, as well as increase flight frequencies to Düsseldorf, Bangkok, Cairo, Kuwait, and Dammam. Extra capacity will also be added to London Heathrow and Kuala Lumpur. The national airline of the United Arab Emirates now has a worldwide network that stretches across 84 cities in 54 countries.

Etihad Airways will take delivery of seven new aircraft in 2012 – three Airbus A320s and four Boeing B777s, with the first three-class B777-300ER deployed on the London route from July. The carrier’s fleet will have grown to 71 aircraft by year’s end.

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.

Hogan highlighted the importance of Etihad’s partnership strategy in boosting passenger numbers in the first three months of the year.

“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.”

Recently Etihad Airways announced China Eastern Airlines had become its 37th partner airline with the signing of a Memorandum of Understanding ( MoU) that encompasses joint route and schedule coordination, codesharing between the UAE and China and, in time, on each other’s networks.

“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.”

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. Hogan said Etihad Airways continued to focus on maintaining profitability, despite challenging market conditions. Escalating fuel costs, in particular, had a major impact on the aviation sector during the quarter.

“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,” he said.

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) said recently that rising oil prices and Europe’s sovereign debt crisis were hanging over the airline industry’s fortunes.

Etihad Airways beat its 2011 break-even target last year when it posted a net profit of $14 million. Despite an industry-wide slowdown in air freight markets, Etihad Cargo defied the trend with revenues up 12.2 per cent to $159 million.