Etihad Airways lifted its profit by 48 per cent last year with its strategy of adding capacity through equity alliances.
Net profit reached US$62 million as sales grew 27 per cent to $6.1 billion. Partnership revenues also rose by 30 per cent to $820m, representing 21 per cent of total passenger revenues.
“Our codeshare partnerships have been an important part of our business performance for the past seven years,” said James Hogan, the president and chief executive of Etihad. “But it is our equity investments that are really taking off now, allowing us to build integrated networks and schedules, develop common products and services, and most importantly identify business and cost synergies.”
Etihad’s growth strategy has relied heavily on expanding its route network through “equity alliances”, in which it invests in carriers that help it to expand its global reach in strategically important regions. Last year Etihad grew its equity alliance to seven, comprising Air Seychelles, Air Berlin, Virgin Australia, Air Serbia, Ireland’s Aer Lingus, India’s Jet Airways and Etihad Regional – formerly known as Darwin Airline.
The latest addition to this growing family of equity alliances could be Alitalia, the loss-making Italian flagship carrier. Etihad said last month that it was conducting due diligence on a possible investment.
“If we decide to invest it must be in the right condition for both parties and we are still working through that,” Mr Hogan said.
Etihad, established in 2003, has gained increased global prominence through its unique approach to gaining market share together with headline-grabbing plane purchases.
The carrier ordered 199 aircraft and 294 engines at the Dubai Airshow, worth about $67bn.
Etihad passenger numbers surged by 12 per cent last year to reach nearly 11.5 million, and 1.8 million passengers were carried through codeshare deals and other equity alliances.
The addition of seven new codeshare deals last year brought the total number of such partnerships to 47. Etihad’s growth plans include adding more than 30 routes by 2020.
Etihad launched routes last year to Sana’a, Amsterdam, Belgrade in Serbia, Ho Chi Minh City in Vietnam, Sao Paulo and Washington.
This year it is planning to fly to Jaipur in India, Los Angeles and Dallas in the US, Zurich, Yerevan in Armenia, Perth in Australia, Rome, Phuket in Thailand, and Medina in Saudi Arabia.
“Given the question marks over Etihad’s policy of buying airline stakes, these results clearly show that the risk-taking approach is working well,” said Saj Ahmad, chief analyst at StrategicAero Research.
“Etihad has arguably de-risked its organic expansion with targeted airline partnerships that are not only feeding its own network, but also giving it access to developing and secondary markets where demand is underserved,” Mr Ahmad added.
Cargo revenues increased 30 per cent in 2013 to $928m.
Etihad expects to receive 18 new aircraft this year, including its first Boeing 787-9 Dreamliner and Airbus A380, Both are scheduled for delivery in the fourth quarter.
“The global market remains challenging in 2014 but the macroeconomic picture is improving in key economies around the world. We believe our new model, and the investments we have made in product, service and infrastructure, mean that Etihad Airways is positioned strongly for top-line growth and bottom-line delivery,” said Mr Hogan.
A report from Alpen Capital yesterdaysaid that the GCC aviation industry has “ outperformed most of the other regional markets”.
“This growth is attributed to the region’s rising population with high disposable income; strong presence of expatriates who travel frequently to their native countries; favourable geographic location; a burgeoning tourism sector; and an underdeveloped railway network in the region,” the report said.
selgazzar@thenational.ae