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Abu Dhabi, UAETuesday 13 November 2018

Etihad to sell cargo aircraft as it shapes new vision

The Abu Dhabi carrier plans to sell part of its cargo portfolio as it implements a review of its operations having reduced services earlier in the year, a company official said on Tuesday

Etihad plans to sell much of its cargo fleet. Courtesy Etihad Airways
Etihad plans to sell much of its cargo fleet. Courtesy Etihad Airways

Etihad plans to sell part of its cargo fleet after grounding them earlier in the year as part of a review of its operations, a company official said on Tuesday.

The Abu Dhabi airline grounded its five A330 Airbus freighters and is now focusing exclusively on the remaining five Boeing 777 fleet, Abdalla Shadid, managing director of the company’s Cargo and Logistics Services told The National.

"Earlier this year we made the decision to exit the fleet of five freighters," he said at the Farnborough International Airshow in the UK. "These have been grounded pending a sale and we are in advanced discussion with buyers for their sale. Hope it will materialise soon and the aircraft will exit our fleet.”

The airline has sought to overhaul its business in the past two years to recover from losses of almost $2 billion (Dh7.34) in 2016. As part of the strategic review, it has backed away from a growth policy of buying minority stakes in global airlines, scrapped unprofitable routes and slashed operating costs.

Etihad's new strategy helped narrow annual losses to $1.52bn in 2017.

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“Despite a lower (cargo) capacity relative to last year we are still able to hit and even improve in some places figures compared to last year," said Mr Shadid. "It validates our decision to finish with the old aircraft, which did not have the right economics for us. We’ve cut bad capacity and redeployed towards good sectors.”

At the core of Etihad’s restructuring is a focus on high-value products, using Abu Dhabi’s position at the crossroads of Europe and Asia, and targeting countries with large freighter demands, said Mr Shadid.

“It’s fair to say Etihad has relooked at its strategy and has a clear direction on how we are going to go forward," said Mr Shadid. "Cargo is crucial to this. Our cargo is not just a key driver for Etihad’s growth but also for Abu Dhabi and what it means creating a world-class logistics hub. It will stay and grow.”

Demand for cargo, measured in freight tonne kilometres, rose 4.2 per cent in May, compared to the same period last year, according to the International Air Transport Association. This, however, was slightly down from the 5.2 per cent growth in annual demand recorded in April.

"We expect air cargo demand to grow by a modest 4 per cent in 2018. That's an uptick from a very weak start to the year,” Alexandre de Juniac, IATA's director general and chief executive has said. He cautioned that increasing tariffs and trade wars could lead to a downturn.

Nonetheless, Mr Shadid was upbeat over industry trend and said pharmaceuticals were a particularly high-yielding commodity to move. However, he also said Etihad wanted to also make use of products that played to Abu Dhabi’s strengths.

“There is a big demand for the movement of animals, in particular horses," he said. We call it the ‘sky stables’ and in the first quarter alone we transported around 900 horses. It is also important to remember things like art and musical instruments if you consider events such as the opening of the Louvre Abu Dhabi. These are high-value products that tie in with our base.”

“We’ve always been successful at moving cars. Now we have streamlined our services and made it a seamless experienced,” he added.

Amid a difficult and often turbulent time, Mr Shadid was keen to emphasise that Etihad might have changed tact – but it was for the good.

“Going forward we have been increasing the focus on trade links and destinations,” he said.