Etihad Airways revenues rise 27% in first quarter as network expands

The Abu Dhabi airline carried 3.2 million passengers in the first three months of the year, up from 2.8 million in the first quarter of 2013 – a gain of 14 per cent.

An Etihad A320 touches on the runway at Abu Dhabi Airport. Andrew Parsons / The National

Etihad Airways yesterday announced a 27 per cent increase in first-quarter revenue to US$1.4 billion as contributions from its equity partners rose 23 per cent.

The airline's codeshare and equity partners contributed $223 million compared with $182m in the same quarter last year. However, Etihad's partners now account for 15.9 per cent of the airline's total revenues compared with 16.5 per cent last year.

The Abu Dhabi carrier declined to provide profit or cost figures for the first quarter. Etihad stated in an annual report published last month that it had made a profit of $62m last year against revenues of $6.1bn, equating to a margin of just more than 1 per cent.

Etihad’s “revenue growth reflects the strong position of Gulf carriers to exploit numerous emerging markets from their Gulf hubs, and echoes the company’s growth as a business, with new routes and aircraft coming on stream,” said John Strickland, the director at JLS Consulting, an aviation advisory firm.

The airline carried 3.2 million passengers in the first three months of the year, up from 2.8 million in the first quarter of 2013 – a gain of 14 per cent. Etihad now flies to 95 destinations, compared with 89 at the same time last year. It also flies more frequently to New York and Medina.

The International Air Transport Association said passenger traffic grew 18.1 per cent in the Middle East in January and 13.4 per cent in February compared with the previous year.

Etihad Cargo, the airline’s freight business, increased its revenues to $243m, up 26 per cent from 2013, when the company recorded revenues of $193m.

Air Seychelles, in which Etihad has a 40 per cent equity stake, last week announced profits of $3m against revenues of $88.7m. This marks a significant turnaround for the Seychelles carrier, which declared revenues of $42.9m in 2012, after two previous years of losses in 2011 and 2010.

“Our strong performance highlights the continued success of Etihad Airways’ strategic master plan, which focuses on the three fundamental pillars of organic network growth, codeshare partnerships and minority equity investments in other airlines around the world,” said James Hogan, Etihad’s chief executive.

Etihad is locked in three-way negotiations with Alitalia and the Italian government over the purchase of an equity stake in Italy’s beleaguered flagship carrier.

“Etihad sees Europe as a key strategic market and wants to increase its presence,” said Mr Strickland. “Alitalia faces numerous problems, so it will be critical for Etihad to extract the best deal possible if they are to go ahead with investment.”

This forms part of a strategy to use Etihad’s capital and know-how to rescue ailing European carriers, in a bid to expand the company’s market share.

The European Commission, the executive body of the European Union, announced at the beginning of the month that it would launch an investigation into foreign ownership of European airlines. EU regulations prevent foreign owners from holding more than 49.9 per cent of a European airline or from exercising “effective control” over an airline.

Etihad’s stake in airberlin, and its potential stake in Alitalia, will fall under the remit of this investigation.

Etihad also announced plans this month to spin off its loyalty programme, Etihad Guest, as a separate entity.

Follow us on Twitter @Ind_Insights