x

Abu Dhabi, UAEThursday 17 January 2019

Etihad Airways lands first profit

Etihad Airways posted a profit for the first time last year and is now planning the next stage of its growth plans.
Etihad announced a net profit of US$14 million for 2011. Andrew Parsons / The National
Etihad announced a net profit of US$14 million for 2011. Andrew Parsons / The National

Etihad Airways is weighing investments in other airlines as it charts its next stage of growth after making its first profit.

The airline in 2007 established a 2010 deadline to break even, but deferred it by one year after the onset of the global financial crisis.

Yesterday it announced a net profit of US$14 million (Dh51.4m) for 2011. Full-year earnings before interest and tax reached $137m, with revenue rising by 36 per cent to $4.1 billion

The results propelled Etihad into the black for the first time since its launch in 2003.

Now the Abu Dhabi-based airline is considering taking additional stakes in other carriers to further increase its range and potential profitability.

Etihad hit the acquisition trail in December by paying $95m for a 29.2 per cent stake in Air Berlin, Europe's sixth-largest carrier. It has also taken a 40 per cent stake in Air Seychelleswith a $20m deal last month.

"In the future, we will continue to look for acquisitions where it makes sense," James Hogan, the chief executive and president of Etihad, said during a news conference about the financial results.

Ireland's Aer Lingus has been one of the latest airlines under consideration. "That's an airline we've looked at, but we haven't entered any dialogue," he said.

Etihad's Air Berlin investment is expected to be one of the carrier's most important growth drivers, adding between €35m (Dh170.2m) and €40m of extra revenue in the first year.

The purchase gives Etihad access to 33 million new passengers flying with the German carrier and to the European market.

But the carrier is also targeting organic growth of its own network, a strategy the airline has relied on to expand since its launch.

"We are looking to stretch our own network and taking over 100 aircraft over the next 10 years," said Mr Hogan. "Over the next 12 months we will continue to expand our network. You will see more flying into the Americas, more flying into Europe and more flying into South East Asia."

Etihad will take delivery of four Boeing 777 planes and three Airbus A320s this year. Financing for two of the A320s is already in place, said James Rigney, Etihad's chief financial officer.

The airline's growth plans are being built from a solid footing after last year' financial performance.

A profit target for this year has been agreed with Etihad's board but was not being released yet, he said. The airline hopes to achieve revenue of $5bn this year.

"We will aim for strong growth again in 2012, in spite of the tough global economic environment, with a passenger traffic target of 10 million and a corresponding increase in profits," said Mr Hogan.

The airline transported 8.3 million passengers last year, up 17 per cent from 2010. The average seat factor - how full each plane is - was 75.8 per cent. That compares with 74 per cent the year before. Mr Hogan said an important factor in Etihad's profitability was the airline's strategy of fuel hedging for every three years.

Purchasing in advance helped to cushion the airline from the impact of rising jet fuel prices, Mr Hogan said. About 75 per cent of the airline's fuel was hedged at $80 a barrel last year.

tarnold@thenational.ae

twitter: Follow our breaking business news and retweet to your followers. Follow us

Updated: February 10, 2012 04:00 AM

SHARE

SHARE