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Etihad Posts $1.8b Loss
Etihad Posts $1.8b Loss

Etihad Posts $1.8b Loss

Etihad Posts $1.8b Loss

UAE's Etihad Airways recorded a net loss of $1.87 billion in 2016 as one-off impairment charges and fuel hedging weighed against a solid performance of the core airline. It posted a total revenue of $8.36 billion. The loss, which compares to a net profit of $103 million in 2015, was the first for the Middle East carrier since it started making money in 2011.
The core airline business achieved steady passenger revenues of $4.9 billion and 79 per cent load factors while carrying a record 18.5 million passengers. Available seat kilometres (ASKs) increased by 9 per cent to 113.9 billion. Yields fell 8 per cent amid market capacity pressures and the tough global economic climate, but this was partially offset by an 11 per cent reduction in unit costs.
Total impairments of $1.9 billion included a $1.06 billion charge on aircraft, reflecting lower market values and the early phase out of certain aircraft types. There was also an $808 million charge on certain assets and financial exposures to equity partners, mainly related to Alitalia and Air Berlin.  
Legacy fuel hedging contracts also had a negative bearing on performance in 2016, though this exposure is expected to have less of a financial impact during 2017.  
A slowdown in the cargo market put increased pressure on cargo revenues and yields, and the airline saw a slight improvement in freight carried at 595,519 tons for the 12-month period.
Mohamed Mubarak Fadhel Al Mazrouei, chairman of the board of the Etihad Aviation Group, said: “A culmination of factors contributed to the disappointing results for 2016. The board and executive team have been working since last year to address the issues and challenges through a comprehensive strategic review aimed at driving improved performance across the group, which includes a full review of our airline equity partnership strategy.
“During 2016, the airline commenced a Right Size & Shape program that generated total overhead savings of 4% through headcount reductions and other measures by the end of the year, even as capacity and total passenger number increased.
“This year is just as challenging for the global aviation industry and the ever-evolving competitive environment is likely to impact overall performance in 2017. However, our airline business remains strong and class-leading, and as an aviation group, we are in a stronger position.”
Peter Baumgartner, chief executive officer of Etihad Airways, said, “We are in an industry characterized by overcapacity, declining market sizes on key routes and changing customer behavior as a weak global economy affects spending appetite."

 

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