Etihad Airways posts record first-half profit as travel demand returns

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Etihad Airways posted record profit in the first half of 2022 – the highest in its 18-year history – citing a strong rebound in passenger travel demand, cargo revenue growth and the lifting of national Covid-19 restrictions. 19.

The Abu Dhabi-based airline returned to the black with a core operating profit of $296 million in the first six months of this year, compared to a half-year loss of $392 million in 2021, supported by a multiplication by four in the number of passengers carried during the period, Etihad Airways announced on Thursday.

Ancillary revenue, cost management, debt reduction and an “agile” business model developed during a five-year restructuring program also helped drive the airline’s six-month profit and other financial parameters at historic levels.

“It’s great to be here after a very strong fourth quarter last year and an exceptional and record-breaking six months for us,” said Adam Boukadida, chief financial officer of Etihad Airways. The National.

“Passenger and yield growth continues to be positive, revenge travel is increasing globally and there are no signs of it slowing down.”

“It’s been four and a half years of transformation, with an agile model, hard teamwork and courage…we’re a unique case study in the best way possible and we’ve earned our gray hairs.”

Etihad Airways forged ahead with a five-year restructuring program that transformed it into a mid-size airline by downsizing its fleet, network and workforce.

The airline has taken further steps to reduce costs and preserve cash flow during the pandemic. This, combined with its transformation program, helped the company weather the global crisis and paid off with historic profits, he said.

State-owned Etihad Airways carried 4.02 million passengers in the first half of 2022, more than quadrupling the 980,000 passengers carried in the same period last year. The average number of occupied seats rose 21.9 percentage points year-on-year to 75% as demand picked up and Abu Dhabi further eased pandemic-related restrictions.

This tripled passenger revenue in the first six months of the year to $1.25 billion as more leisure and business travelers took to the skies and more countries in the network ‘Etihad have eased their Covid-related travel restrictions.

The airline’s earnings before interest, taxes, depreciation and amortization (Ebitda), a measure of a company’s overall financial performance, improved to $691 million.

Air cargo activity remained strong with a 6% year-over-year revenue increase to $802 million in the first half of the year, while cargo volumes fell 19% to 295,020 tonnes, as increased passenger volumes have limited hold capacity, Etihad said.

Etihad’s positive earnings came despite its fuel costs rising nearly 60% from the first half of 2021 as oil prices rose. The airline covers 25% of its fuel needs for 2022, Boukadida said.

Fuel accounts for 35% of the airline’s total costs, the chief financial officer said.

However, the airline kept tight control of its costs. It reduced fixed overhead and financial costs in the first half of 2022 by 9% (or $29 million) and 13% (or $22 million) respectively.

Operating costs rose 26% as the airline scaled up operations to meet demand and increased capacity by 46%, he said. It operated 71 aircraft during the six-month period, compared to 64 jets in the first half of 2021.

Outlook for 2022

Boukadida touted the airline’s possibility of posting an annual profit in 2022, a year ahead of schedule, depending on market conditions.

“We expect full-year earnings and other positive financial metrics, but things can change overnight,” he said.

The third quarter is “extremely good” and the fourth should also be “good” as the UAE prepares to host global events such as the UFC and Formula 1 racing, he added.

In July, Etihad load factors (a measure of an airline’s ability to fill its available seats) are expected to be around 87-88% for the month, he said.

Load factors for August are currently expected to be in the 88-90% range.

Have airfare increases peaked?

Etihad, which operates 39 Boeing 787s and has 11 more on order, expects to take delivery of some Dreamliner jets “at the end of 2023”, Mr Boukadida said, although the exact number remains to be determined.

Boeing has suspended deliveries of the jet model worldwide due to ongoing production issues.

Etihad, which has signed a letter of intent for seven Airbus A350 freighters, expects that contract to become firm “soon”, he said, without giving a specific date.

The airline, which had grounded its A380 superjumbos during the pandemic, is considering returning the four-engined plane to the skies, but it is “too early” to make a decision as oil prices remain high.

Oil prices of $65 to $80 could justify the return of the double-decker bus to the fleet, although the decision depends on other key variables such as travel demand, capacity and ticket prices, he said. he declares.

Asked if the airline industry’s rise in airfares had peaked this summer, Mr Boukadida said: “With demand where it is and with limited capacity to roll out, this is not the case. may not be the end of price increases.”

Maintain momentum

Tony Douglas, chief executive of Etihad Aviation Group, said the airline is “coming out of the pandemic stronger than ever”.

“Our goal now is to build on this momentum in the second half of the year,” Douglas said.

Updated: July 29, 2022, 12:02 a.m.

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