Etihad on track for another profitable year after 48% surge in first-half income

Etihad Airways is on track for its third consecutive year of annual profit, after it posted a 48 per cent increase in its first-half income on the back of strong travel demand fuelled by a strategic network expansion and increased flight frequencies. Profit after tax grew to Dh851 million ($232 million) in the January to June period, up from Dh575 million in the same time last year, the airline said in a statement on Thursday. The airline is also looking to Boeing's new boss , who steps into his role on Thursday, to ensure the on-time delivery of planes, Antonoaldo Neves told The National. The Abu Dhabi-based airline is facing late aircraft handovers from both Boeing and Airbus and while these delays will not curtail its growth, it could have expanded further if it had received the additional capacity on time, Etihad Aviation Group chief executive Mr Neves said. “As far as the Boeing CEO is concerned, I wish that he does a great job, it's important for the industry. He has a big challenge ahead of him. I hope this new phase comes with the anticipation of planes, not delaying planes,” he said. “The 787 is a very stable plane in terms of its performance, so our issue on the 787 is only related to delivery, and we need to make sure the deliveries come in time.” When Mr Neves meets Boeing's new chief executive Kelly Ortberg “sooner or later”, he will have one key request for the new leader of the troubled US plane maker. “When I meet him and I ask him one thing, it's going to be: 'please deliver my planes on time',” Mr Neves said. Etihad Airways expects to receive a total of 20 Boeing and Airbus jets – a mix of A350 wide-bodies, A321LR narrow-bodies and 787 Dreamliners – after July 2025 onwards, later than the original schedule of April 2025 and after the peak summer travel period. “I'm going to lose a big opportunity in the summer. Of course, we're going to do well next year, and we are doing well this year, but we could do more,” Mr Neves said. “Imagine it would be really nice for our customers when they fly with us and we land 10 minutes ahead of time. So it would be really nice if Boeing and Airbus treated us the same way, right? 'Look, I have good news, I'm delivering a plane one month ahead of schedule!' Why not?", he said. Receiving timely deliveries of fuel-efficient next-generation aircraft, which burn 20 per cent less fuel than their predecessors, is important for airlines to meet their sustainability goals. “What's the point of discussing SAF [sustainable aviation fuel] if we don't have new-generation planes that are going to make a difference? It's frustrating,” Mr Neves said. “Etihad is lucky to a certain extent because our delays are not compromising our growth plans.” To address the shortfall in capacity, the airline is returning five of its 10 Airbus A380 double-deckers that were grounded by the pandemic back into service. It also leased six A321 Neos and increased the utilisation of its existing fleet. Etihad is also studying “eventually” returning more of its A380 superjumbos to the skies, depending on market conditions, Mr Neves said. The Etihad chief joins a growing chorus of aviation leaders expressing frustrations about continuing aircraft delays. This comes as Airbus struggles to reach production output goals and Boeing struggles with a safety crisis, which was caused by a panel flying off a 737 Max jet in January. Delays in delivering planes have hobbled global airlines' efforts to fully capitalise on the post-pandemic surge in air travel demand. Airbus chief executive Guillaume Faury said last month at the Farnborough Airshow that the European plane maker is making progress in increasing production of its passenger jets. Boeing's chief of commercial aeroplanes unit Stephanie Pope acknowledged that the US manufacturer has disappointed its customers but is making transformational and systemic changes based on feedback from its employees, airlines and regulators. Etihad Airways on Thursday said its profit for the first six months of 2024 increased 48 per cent year-on-year as both passenger and cargo revenues grew. Total revenue rose 21 per cent on an annual basis to Dh11.7 billion in the first six months, mainly driven by a 24 per cent increase in passenger revenue. Its cargo revenue also rose 10 per cent compared to the same period of 2023, due to higher demand and increased freight capacity in the fleet. Etihad carried 8.7 million passengers during the first half of the year, up 38 per cent year-on-year, while its load factor remained at 85 per cent. Operational efficiencies led to lower unit costs, with the cost per seat kilometre (CASK) down by 5 per cent year-on-year in the first half of 2024. The financial performance comes despite an operating environment for airlines that is “not as good as last year” due to inflationary pressures, aircraft shortages, oil price volatility and increasing costs. “The growth strategy that we defined, and the way we're implementing it, is helping us expand our margins. It working better than we were expecting. In some aspects we were a bit conservative in our estimates,” Mr Neves said. The incremental flights frequencies that were added to Europe and markets within a four-hour flying radius, such as GCC and Colombo, are “doing extremely well”, he said. Etihad Airways aims to triple passenger numbers to 33 million and double its fleet to 150 planes by the end of the decade. The airline is also preparing for a potential listing – a first for a major Gulf airline – as part of its growth plans. Some airline chiefs in Europe are fretting about travel demand starting to normalise amid signs the post-Covid boom may be starting to lose steam just as carriers are racing to increase flights. However, Etihad Airways is not seeing signs of travel demand slowing down in the region as GCC economies continue to expand, Mr Neves said, echoing comments by other Gulf carriers. “I don't see any signal of demand issues in the region, actually demand is constant. Competition is increasing, which is good for the region and puts some pressure,” he said. “To compensate for any kind of competitive pressure that we have, we're evolving our business model and becoming more efficient each and every day,” Mr Neves said. This entails reductions in unit cost, better aircraft utilisation, improvements in revenue management practises and investments in digitalisation. Ticket bookings for August are already “very strong”, he said. Many airlines are calling off flights to Israel and Lebanon amid fears of a potential broader conflict after the killing of senior members of Hamas and Hezbollah. Etihad Airways is among the airlines still continuing operations to Beirut and is monitoring the situation closely. Asked if the escalating tensions may impact the airline's bookings, Mr Neves said: “No, we don't see any weakness in bookings … geopolitical uncertainty in the region, of course, affects us but in the bigger scheme of things it's no different than when we have a strike in a European airport and bookings drop.” The diversity of Etihad's route network means that weakness in one market is often compensated by growth in other areas, he added. “You're not ultra-dependent on any specific market and you can manage the situation,” he said. Etihad expects a robust performance in the third quarter and is on track to earn an annual profit in 2024, according to the chief executive. “Bookings are strong, demand is strong and we are excited about the future,” Mr Neves said. Etihad Airways' growth is key to developing Abu Dhabi as a global travel hub. The airline's 8.7 million passengers in the first half of the year accounted for more than 63 per cent of the total 13.7 million passengers at the emirate's Zayed International Airport from January to June. “Etihad continues to play a pivotal role in advancing Abu Dhabi's tourism and economic development. Our strategic growth and network expansion not only bolster the connectivity of our capital but also significantly contribute to the prosperity of the UAE's economy,” said Mohammed Al Shorafa, chairman of Etihad Aviation Group. The airline operates to 81 destinations globally with an operating fleet of 92 aircraft, including five freighters, as of the first half of 2024.

Etihad on track for another profitable year after 48% surge in first-half income

Abu Dhabi-based airline pins hopes on new Boeing chief for on-time jet deliveries