Etihad Airways swings to operating profit as travel demand returns

Etihad Airways on Thursday posted a $296 million record-breaking core operating profit in the first half of 2022 compared to $392 million loss in the same period last year despite higher fuel costs.

The Abu Dhabi-based airline, which did not disclose first-half net profit, said fuel costs surged almost 60 per cent but it still managed to record operating profits due to resumption of flights after ease in travel restrictions this year.

The state carrier welcomed over three million more passengers during the January-June 2022 as it handled 4.02 million passengers compared to 980,000 in the same period last year with an average seat load factor at 75 per cent.

“Passenger loads increased consistently over the first six months, rising by 21.9 percentage points as travel demand recovered. The airline saw a strong boost in passenger volumes in February as Abu Dhabi further relaxed pandemic-related restrictions,” the airline said in a statement.

Network capacity surged

The network capacity surged 46 per cent from 16.4 billion to 24 billion ASKs as the airline connected Abu Dhabi to 71 passenger and cargo destinations across 45 countries. The first half of the year saw Etihad launch five summer services, including new seasonal routes to Heraklion on the island of Crete and the French city of Nice.

Tony Douglas, group chief executive officer, attributed the positive results to the airline’s transformation programme and said Etihad is emerging from the pandemic stronger than ever.

“As air travel came roaring back in 2022, Etihad was there to reconnect our customers with their loved ones and take them on their long-awaited vacations, carrying over four million passengers to and from our beautiful home of Abu Dhabi,” he said.

Financial highlights

Etihad’’s earnings before interest, taxes, depreciation and amortisation (EBITDA) climbed to $690 million in the first half from $6 million in the same period of 2021 while operating revenue rose to $2.29 billion from $1.23 billion.

The airline’s passenger revenues tripled in the first six months of the year, climbing to $1.25 billion in the first half compared to $320 million in the corresponding period as more business and leisure travellers returned to the air. This was supported by more countries across Etihad's network relaxing their Covid-related travel restrictions.

Strong cargo revenues

Cargo operations continued to deliver exceptional results with revenues of $802 million in the first half of 2022, representing an increase of sie per cent on the same period last year. Revenues remained strong despite the increase in passenger volumes limiting belly-hold capacity, leading to a 19 per cent reduction in freight carried.

The airline’s fixed overhead and finance costs decreased in the first half of 2022, falling by nine per cent, or $29 million, and 13 per cent or $22 million, respectively.

"Our transformation programme has made Etihad substantially more resilient and efficient, and we are extremely proud of our return to profitability in the first half of 2022,” Adam Boukadida, chief financial officer, said.

Fixed overhead, finance costs

"In the first half, we managed to further reduce our fixed overhead and finance costs by $50 million compared to first half of 2021, reduce the level of debt on our balance sheet, and improve our EBITDA by more than $600 million,” Boukadida said.

“While ramping up our operations and recording a four-fold increase in passenger volumes, we kept a tight hold on our cost base. As a result, our operating costs only rose by 26 per cent despite a 46 per cent increase in deployed capacity,” he said.

"Our overall operating profit of $296 million is testament to the strength of our business model at Etihad and the improvements we have made to our underlying financial performance over the years,” Boukadida concluded.

— muzaffarrizvi@khaleejtimes.com