Etihad Airways charts growth path to 2030, with new terminal 'critical' for next phase

Exclusive: Abu Dhabi airline's chief executive expects it to record a second consecutive annual profit in 2023, as it marks its 20th anniversary this month

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Etihad Airways is charting an ambitious growth path through to 2030, with its hub at Abu Dhabi's new airport terminal “critical” for future expansion as the airline departs from years of restructuring and losses, its chief executive Antonoaldo Neves has said.

The carrier aims to triple the number of passengers carried to 33 million, double its fleet to 150 planes and increase its available seat kilometres – a measure of an airline's seats multiplied by kilometres flown – by about 30 per cent annually over the next seven years.

To hit these targets, Etihad plans to hire hundreds of pilots and crew, build “fleet flexibility” through aircraft leasing and capitalise on efficiencies at its modern terminal, Mr Neves told The National.

The first step is to move into the new terminal, the second step is to have a fleet plan that is flexible but at the same time allows us to grow a lot … The third step is to make sure that I get the pilots, flight attendants, mechanics and engineers needed to deliver all that growth,” he said.

Terminal A will play a key role in helping the airline expand its operations.

The new terminal is critical; we cannot do it without Terminal A. The reason is we're going to double the size of our fleet and triple the number of passengers in seven years and this year we're going to carry 13 million passengers. But it's impossible to do more in the current terminal,” Mr Neves said.

The Abu Dhabi International, set to be renamed Zayed International Airport from February 9, 2024, “is the only airport in the region that now has two parallel runways for passenger flights … So, we can grow a lot in that airport, it has a capacity of 45 million passengers”.

Contactless travel points, the use of boarding bridges rather than buses and faster transit times for passengers means the airline is “going to be squeezing efficiencies from the new terminal”, he said.

Etihad Airways operated its first commercial flight from the new Terminal A at Abu Dhabi International Airport on October 31, revealing new lounges at the modern hub, ahead of its full transition to the new terminal building.

This move will happen in phases between November 9 and November 14.

Hiring 20 new pilots a month

Etihad is hiring 250 pilots this year, at a pace of about 20 new pilots a month, Mr Neves said.

In 2024, the airline will hire another 200 pilots and 1,000 cabin crew, after it added 16 aircraft to its fleet this year and plans to lease more aircraft, he said.

The 16 jets are a mix of Boeing 787 Dreamliners, Boeing 777 wide-body aircraft, returning Airbus A380s and Airbus A320 narrow-body jets that were previously grounded.

The airline added the planes in the fourth quarter of this year and needs to hire more pilots and crew to operate them.

“By the end of 2024, early 2025, Etihad Airways will be … bigger than ever before in terms of passengers, available seat kilometres and fleet,” Mr Neves said.

“It's incredible. An airline that was restructured over the last five years, now we're back to the game. I'm trying to actually front-load growth now.”

Etihad Airways' available seat-kilometres will grow by 30 per cent this year and 25 per cent next year, he said.

“We are a totally different airline – profitable, with a business model that makes a lot of sense and with a solid foundation on profitability and cost-wise,” Mr Neves said.

In 2023, the airline expects to record an annual profit for the second consecutive year on the back of strong travel demand, as it carries 13 million passengers, as well as a 13 per cent year-on-year reduction in unit costs, a better route network and improved customer service, he said.

Next year, it expects to cut unit costs by an additional 7 per cent.

“Everything that isn't improving customer service, we're just cutting … We're obsessive about cost,” Mr Neves said.

While high inflation rates are “a problem”, the airline has renegotiated contracts with its suppliers as the procurement of large volumes has helped it to secure lower prices, he said.

The airline is also keeping an eye on its cash-flow levels to fund expansion.

“I pay special attention to cash-flow generation. This year we're going to generate a lot of cash from operations,” Mr Neves said.

“That's as important as profitability because as we grow, we need to finance our growth using cash flow from operations,” he said.

'Fleet flexibility' is key to growth

Mr Neves is also focused on building “fleet flexibility” in the next phase of the airline's growth.

While plane deliveries from existing orders will continue to arrive in Abu Dhabi, the airline will also consider the option of leasing jets when they are needed.

“I don't want to lock in all these 150 planes for the next seven years today. It makes no sense,” he said.

“I may want to change a little bit the fleet plan. So, if things are going really well, I may want to add more widebodies. If we have some headwinds in a specific region then the narrow-bodies may be a bit better for us.

“So, what we have done over the past six months is we built a fleet plan that has a lot of flexibility.”

The airline has also secured positions with lessors so that it can get the planes it needs between now and 2030.

“But we still have buffer, so I can still put in new orders, I can still get additional planes from lessors. But we're not going to make any big announcements soon, we prefer to keep fleet optionality or flexibility,” he said.

The airline is currently in discussions with plane lessors for five aircraft, after submitting a request for proposals, he said.

These are a mix of wide-body and narrow-body jets and the deal is expected to be concluded within six weeks, he said, without revealing the plane models or the leasing company.

The airline 'everyone wants to fly'

Over the last few years, state-owned Etihad had defined itself as a medium-sized boutique airline.

Mr Neves said a lot of time was spent discussing the airline's new direction and identity with the government shareholder and the company board before reaching “full alignment”.

“If I have to summarise this, I would say we want to be the airline everyone wants to fly,” Mr Neves said.

“Our mandate from the shareholder is very clear: Deliver an extraordinary customer experience and, at the same time, make money.”

The airline seeks to deliver “amazing” first and business class experiences for premium travellers with its new airport terminal, but also to compete with budget airlines with a better economy class offering.

“If I have to compete with the likes of Qatar Airways and Emirates, I have to have a premium experience that is amazing, otherwise I'm not going to make money,” Mr Neves said.

“So, the front of the plane, the first rows where we have business and first class, I have to deliver an amazing experience so that all the VIP customers fight to fly with us,” he said.

“But, at the same time, I cannot pretend that I'm not competing with low-cost carriers into Europe and India.

“I have to have a product to compete with Indigo and all the low-cost carriers that are coming … We are not a low-cost airline but at the back of the plane, I have to have rows where I have a cost-conscious product, but [one that is] always going to be better than my competition.”

About 70 per cent of Etihad Airways' revenue comes from economy class, said Mr Neves.

“I need to be mindful that the competitive dynamics of economy class is totally different, so I need to provide the customer with an amazing experience for the price he is paying,” he said.

“So, that's why we aim to be the airline that everyone wants to fly.”

Etihad Airways also has a joint venture with budget carrier Air Arabia, known as Air Arabia Abu Dhabi, which is based in the UAE capital.

“I don’t believe in that tension between point-to-point and connecting travel … We have to connect people if we want to be a relevant airline in region,” he said.

“At the same time, we need to bring local demand into Abu Dhabi because we make money doing that. So, I see a future where we have both.”

“If I'm everything, then I'm nothing. It's a daily exercise, we have to say no to some things … otherwise to become 'an airline that everyone wants to fly' is going to fail … It's an aspiration, it's a direction for us,” he said.

Israel-Gaza war impact

Etihad Airways is currently operating a daily flight to Tel Aviv to the “highest safety standards” amid the Israel-Gaza war.

“We’re one of the few airlines in the world that don’t have to [stay] overnight in Israel; we go and return on the same day,” Mr Neves said.

“Demand is very volatile. Some days there is a lot of demand, other days it's not as strong … We’re committed to the market and committed to flying there,” he said, adding that the airline assesses the operational conditions of the route on a daily basis.

Twenty years of service

In October 2022, the Etihad Aviation Group appointed Mr Neves, the former boss of Portuguese airline TAP, to succeed Tony Douglas as chief executive.

This came after the Abu Dhabi government transferred ownership of the Etihad Aviation Group – the parent of Etihad Airways – to holding company ADQ as part of efforts to transform the emirate into a global aviation hub.

The move followed a five-year restructuring programme that transformed Etihad Airways into a medium-sized airline as it reduced its fleet, network and workforce.

The aim was to turnaround the airline to stem consecutive annual losses after a failed growth strategy of investing in minority stakes of airlines around the world, including Jet Airways, Virgin Australia, Air Berlin, Air Seychelles and Air Serbia.

Last year, Etihad Airways swung to an annual profit amid a strong air cargo performance.

The UAE airline was established in July 2003 following a royal decree issued by the late President Sheikh Khalifa, who was Crown Prince of Abu Dhabi at the time.

The airline began offering services on November 5, 2003, with a ceremonial flight to Al Ain.

A week later, on November 12, it officially began commercial operations with flights to Beirut.

Updated: November 09, 2023, 3:14 AM