05 Mar 2013 12:47
Etihad Airways, the national carrier of the United Arab Emirates, is hosting 450 representatives from global leasing, financial markets and banking communities at financial roadshows in New York and London.
President and Chief Executive Officer of
Etihad Airways, James Hogan, said the airline had been undertaking the annual
financial roadshows since 2008 to brief major financial institutions on its
strategy and performance.
“We are developing enduring relationships in
a competitive environment so that we can continue to build a resilient and
diversified access to the financial markets.
“As part of our briefings we are speaking to
institutions from many markets offering diverse products and solutions, so that
we know what’s on offer and so that we can explain our business and finance
strategy in this phase of Etihad Airways’ rapid and sustained growth.
“It is important that financial institutions
around the world understand our story and are comfortable investing in Etihad
Airways. This is how we take them on the journey,” Mr Hogan said.
Etihad Airways’ Chief Financial Officer,
James Rigney, also expanded on the airline’s future financial strategy.
Ricky Thirion, Etihad Airways’ Vice President
and Group Treasurer, discussed the financial risk management strategies the
airline has in place.
Etihad Airways recorded a leap in net profit
of 200 per cent to US$42 million in 2012 and a rise of 16 per cent in EBITDAR
(earnings before interest, tax, depreciation, amortisation and rentals) to
Etihad Airways has attracted support from
more than 60 institutions globally, which now provide more than US$7.1 billion
in cumulative funding for the airline’s ongoing expansion.
The airline works
with banks from across the globe representing every major market in Asia, the
Gulf states, Europe and North America.
“Our bankers understand and trust what we are
doing and share the vision we have to be the best airline in the world,” Mr
Etihad Airways has been successful in
building the first ‘equity alliance’, with investments in Air Seychelles (40
per cent), airberlin (29.21 per cent), Virgin Australia (9 per cent) and Aer
Lingus (2.987 per cent).
This strategy continues to build
momentum in Etihad Airways’ business model, which is outside the thinking of traditional,
legacy alliances. In 2012, for example, partner airlines contributed
approximately 20 per cent of passenger revenue.
Fuel, however, continues to be the most
significant cost for the airline, accounting for around 40 per cent of total
operating costs, before fuel hedging gains. Actively hedging 80 per cent of
fuel costs with 22 financial institutions minimised the impact of the increase
in global oil prices during 2012.
Etihad Airways currently has 76 per
cent of its fuel costs hedged for 2013, 44 per cent for 2014, and 19 per cent
Mr Hogan said Etihad Airways was committed to
a diversified finance strategy, which included traditional and emerging finance
mechanisms across financial institutions in different regions.
“We are very careful to balance our risk and
not be reliant on any one institution, market or funding type.”
Etihad Airways uses a variety of funding
forms, including commercial debt, Islamic structures, operating leases, tax
leases, and European and US export credit agency supported financing.
The funding is used to grow the
fleet of new, fuel-efficient aircraft. In 2008, Etihad Airways placed an order
for 205 aircraft, 100 firm and 105 options, in order to secure capacity for the
next decade of growth.
The airline will take delivery of
14 aircraft in 2013: six passenger widebody (B777-300ER), three freighter
widebody (B777F, A330), and five narrowbody (A319/A320/A321) aircraft.
In September 2012, the airline
issued a request for proposal (RFP) to finance nine widebody aircraft for
delivery in 2013 worth US$1.5billion. Fifty-five bids were received in response
to the request and all of the aircraft have been mandated for financing with
four lessors and lenders.
An RFP will be issued soon to
finance four A320s and one A321 aircraft for delivery between August 2013 and