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.
Etihad Airways' chief executive
“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.
First-half profit
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.
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President Sheikh Mohamed and his predecessor President Sheikh Khalifa with officials in front of an Airbus A330-300 before Etihad's first flight in November 2003. Wam -
An Etihad jet prepares to make the airline's first flight in 2003. Photo: Etihad -
Members of the aboriginal dance group, Descendance, attend the launch of Etihad's first flight in Sydney, Australia, in March 2007. Getty Images -
The Etihad logo is painted on an Airbus A330-300 aircraft at the Toulouse-Blagnac airport zone in France. Gilles Bouquillon for The National -
Etihad's first Boeing 777 cargo aircraft was received in 2011. Photo: Etihad -
Air Berlin chief executive Hartmut Mehdorn and his Etihad Airways counterpart James Hogan pose for a picture after the UAE airline agreed to become the biggest shareholder in the German carrier in December 2011. AFP -
The UAE airline offered Wi-Fi services on board in 2012. Photo: Etihad -
An Etihad flight attendant stands in front of the airline's new Airbus A380 at Abu Dhabi airport in December 2014. AFP -
Etihad's new livery was unveiled in 2014. Photo: Etihad -
The Residence suite was launched in 2014. Photo: Etihad -
Abu Dhabi Airport officials take pictures as Etihad's A380 taxiis towards the new South Runway for take-off at Abu Dhabi International Airport, December 23, 2014. Ravindranath K / The National -
Australian actress Nicole Kidman on the set of an Etihad advertising shoot in Abu Dhabi in January 2015. Silvia Razgova / The National -
The airline was named the Middle East's leading airline in terms of first-class travel by the World Travel Awards in 2015. Photo: Etihad -
Etihad's Boeing 787 started operating in 2015.Photo: Etihad -
Air Seychelles chief executive Manoj Papa at the airport in Victoria, the capital of Mahe, the largest island in the archipelago, in March 2015. Etihad acquired 40 per cent of Air Seychelles in January 2012. Silvia Razgova / The National -
Etihad won the World's Leading Airline award in 2016. Photo: Etihad -
An Etihad plane with livery featuring the Year of Zayed initiative in 2018. Photo: Etihad -
The Etihad plane that flew from Abu Dhabi to Amsterdam using biofuel, the first UAE aircraft to do so, in January 2019. Photo: Etihad -
Boeing and Etihad entered into a sustainability partnership that was announced at the Dubai Airshow in 2019 with the launch of the Etihad Greenliner. Photo: Eithad -
Etihad's 50th National Day livery, as seen in 2021. Photo: Etihad -
An Etihad aircraft performs a flyover before the final race at the Etihad Airways Abu Dhabi Grand Prix in 2021. Victor Besa / The National -
Etihad's Airbus A350 entered service in 2022. Photo: Etihad -
Abu Dhabi International Airport's Terminal A opened in 2023. Photo: Etihad -
Etihad officials and flight crew pose for a picture after the airline operated its first flight from Terminal A on October 30, 2023. Photo: Etihad -
A passenger checks in at an Etihad counter on October 30, 2023. Photo: Etihad
Strong travel demand continues
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.
Geopolitical risks
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.
Positive 2024 outlook
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.
