19 Mar 2013 11:30
Etihad Airways today heralded a successful first year of its equity alliance strategy, after a financial reporting season which saw each of the five airlines within the alliance – airberlin, Air Seychelles, Virgin Australia, Aer Lingus and Etihad Airways – announce profitable performance.
The airlines’ individual and
collective results were boosted by a number of measures, including growing
codeshare traffic between their networks, successful joint sales and marketing
efforts, and a range of increasing business and cost synergies.
James Hogan, Etihad Airways’
President and Chief Executive Officer, welcomed the success of the airlines.
He said: “2012 was a year in
which the global economy remained very tough and in which airline industry
profits as a whole shrank, for the second successive year.
“Yet each of the airlines in
our equity alliance showed strong financial performance with each reporting a
“That broadcasts two
messages, loud and clear. First, we have
invested in businesses and in management teams which have the vision and focus
to outperform the wider industry. Second, the ‘win-win’ of more passengers and
shared cost synergies that our alliance brings to each member is having a
positive effect on performance.”
The airlines’ results
- Etihad Airways reported a second year of earnings before interest
and tax (US$170 million) and net profit (US$42 million), in only its ninth year
- airberlin, in which it holds a 29.21 per cent equity stake,
reported operating profit of EUR 70.2 million in 2012, a turnaround of EUR
317.20 million on the previous year. The airline’s net income of EUR 7 million
marked a return to bottom line profitability for the first time since 2007.
- Air Seychelles, in which Etihad holds a 40 per cent stake and has
been awarded a five-year management contract, reported 2012 net profit of US$1
million, its first profitable year since 2007.
- Virgin Australia, in which Etihad holds a nine per cent stake, reported
statutory profit after tax of AUD$23 million for the six months to 31 December
2012 (the airline’s financial year is to 30 June).
- Aer Lingus, in which Etihad holds a 2.987 per cent stake, reported
operating profit up 40.7 per cent to EUR 69.1 million, with net profit of EUR 40.6.
Etihad Airways’ equity
alliance model has seen increasing cooperation with each of its equity
It has codeshare
relationships in place with each of the other four airlines, adding to its 38
other codeshares around the world, which together delivered more than 1.2
million passengers onto the virtual network. airberlin, Virgin Australia and
Air Seychelles have also already launched new services to Abu Dhabi from their
In 2012, Etihad Airways and
its equity partners carried 76 per cent of all passengers at Abu Dhabi airport.
With the addition of the airline’s remaining codeshare partners, the combined
passenger number amounted to 83 per cent.
Etihad Airways also initiated
a range of business and cost synergy programs, covering fleet and engine
acquisition, maintenance, recruitment and training, and joint marketing.
It is working with its equity
alliance partners to develop ‘centres of excellence’ in which operational and
commercial expertise is pooled to deliver best practice across the group.
Mr Hogan said: “Because
we’ve got ‘skin in the game’, we go much, much further than the legacy alliances. Our new model gives benefits on both sides of
the equation – revenue and costs.”
James Rigney, Etihad
Airways’ Chief Financial Officer, said: “On revenues, we have seen major boosts
to our own traffic from our equity alliance and our other codeshare partners,
generating more than US$600 million in additional revenues to Etihad Airways alone
during 2012. Of course, those are
two-way streets, with all our partners being fed passengers from our growing
“Where we really win is in
the business and cost synergies. We have
been able to share many benefits already with our equity partners and, in what
has only been the first year of this strategy, we have only scratched the
In its latest business
forecast, published in December 2012, IATA forecast an overall drop in global
airline industry profits, from US$8.8 billion in 2011 to US$6.7 billion in
Each of the regions in which
Etihad Airways equity alliance partners are based was also forecast to drop:
Europe down from US$0.4 billion to US$0.0 billion; Asia-Pacific down from US$5.3
billion to US$3.0 billion; and the Middle East down from US$1.0 billion to US$0.8
Mr Hogan said: “When we took
the first steps on this strategy, with our investment in airberlin, we described
it as a game-changer.
“I am pleased to see that it
has changed the game, not just for Etihad Airways but for each of our partners.
These are strong and strengthening businesses, which have outperformed the
global market and their own regional markets in 2012.
“The overall economic
outlook remains challenging in 2013. The strengths of our equity alliance point
towards a positive year ahead, with many further benefits to be unlocked for
each of us.”