Etihad passes $1bn sales landmark

A revenue rise of 39 per cent in the third quarter gives Etihad Airways confidence it will achieve its break-even target for this year.

Etihad's passenger numbers increased by 18 per cent between July and last month compared with the same period last year. Andrew Parsons / The National
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Etihad Airways is confident it will achieve its break-even target for this year after revenues increased 39 per cent in the third quarter to US$1.1 billion (Dh4.03bn).

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The bullish prediction bucks the trend for gloomy forecasts for the global aviation industry.

"Despite the continuing challenges of high fuel prices and economic downturn in many of the markets in which Etihad operates, we are seeing strong growth in all our key commercial indicators," said James Hogan, the chief executive of Etihad.

It was a record third-quarter for the airline, which has added six aircraft to its fleet in the past year, allowing it to increase its flights to destinations including Manchester, Manila, Bangalore and Paris.

Airlines globally are expected to suffer a fall in total industry profits from $6.9bn this year to $4.9bn next year, according to the International Air Transport Association (Iata).

"One of the challenges that we don't have … that a European carrier has is legacy costs and the advantage we have is that we set up this business with a clean sheet of paper," said Mr Hogan.

"When you ramp a business up so quickly as we have, that does put pressure on the business, but what you are seeing now, if we look to the end of the year, we are confident that we can achieve our commitment to our board, which is to break even."

The airline did not disclose a full income statement.

Fuel-hedging measures taken by the airline has left it less exposed to soaring oil prices.

"The industry has shifted gears downward," Tony Tyler, IATA's director general and chief executive, said this week.

"The pace of growth in passenger markets has dipped and the freight business is now shrinking at a faster pace. With business and consumer confidence continuing to slump globally there is not a lot of optimism for improved conditions any time soon."

Mr Hogan said the airline's third-quarter "figures contributed to strong profitability at an ebitdar [earnings before interest, tax, depreciation, amortisation and rentals] level and the airline had moved into monthly operating profitability".

Etihad's passenger numbers were up by 18 per cent to 2.25 million between July and last month compared with the same period last year.

"Operating costs rose 12 per cent, on a 12 per cent rise in capacity, while non-fuel costs rose only 7 per cent," Etihad said.

The airline's seat factor, or occupancy rate, increased by 3.8 per cent to 80.7 per cent, which it said was the highest quarterly result in its history.

It is planning to launch flights to the Maldives, the Seychelles, Chengdu in China this year.