Etihad Airways profit soared 52 per cent last year amid what its chief executive described as “aggressive protectionist sentiment” in the United States and Europe.
The Abu Dhabi carrier posted a net profit of US$73 million last year. Revenue rose 26.7 per cent to $7.6 billion. “Although our growth continued strictly to plan last year, we are faced with unprecedented external challenges,” said James Hogan, the Etihad president and chief executive. “Of particular concern has been the rise in aggressive protectionist sentiment in Europe and the US, where both Etihad Airways and its partner airlines are being targeted,” he added.
Earlier this year, the big three US carriers – American, Delta and United – claimed that Emirates, Etihad Airways and Qatar Airways had received $42bn in subsidies from their governments, in violation of the open skies agreements between them and the US.
The carriers face similar competition headwinds in Europe, where Germany and France – backed by their respective airlines – want the European Commission to address claims of unfair state support. “Despite these hurdles, Etihad Airways will continue to grow as planned this year, working with our equity and codeshare partners around the world to serve the destinations that our guests want to visit and at the times they want to travel,” said Mr Hogan.
Etihad’s growth strategy is focused on expanding its global route network by forming code-share partnerships and equity partnerships, in which it takes stakes in carriers in strategically important regions. Its equity partners include airberlin, Alitalia, Virgin Australia, India’s Jet and Air Seychelles.
Etihad carried 14.8 million passengers last year, up 22.3 per cent from 2013. The airline launched 10 new destinations, and through its codeshares and equity partners it expanded its route network to 500 destinations.
Etihad said revenue from its equity partners grew to $1.12bn last year, an increase of 37.7 per cent year-on-year. Its equity partners represented 24 per cent of its total passenger revenue.
“It is encouraging to see profit growth for Etihad and the company’s affirmation of its commercial rationale. While profit has increased they are not yet at a sustainable level,” said John Strickland, director of the UK-based company JLS Consulting.
“The airline will still need to invest significant energy in delivering profit from its largest investments, Alitalia and airberlin, so that they become strong future contributors to profitability.”
Last year, Etihad invested €560m (Dh2.24bn) to acquire a 49 per cent stake in the financially ailing Italian carrier Alitalia, along with a 75 per cent in Alitalia’s loyalty programme, and five pairs of London Heathrow slots to lease back to Alitalia.
The airline has yet to make profit.
selgazzar@thenational.ae
Follow The National's Business section on Twitter
