03 Mar 2014 13:00
Etihad Airways, the national carrier of the United Arab Emirates, today announced record financial results for 2013, with net profit up 48 per cent to US$62 million on revenues up 27 per cent to US$6.1 billion.
The record performance also saw earnings
before interest and tax (EBIT) up 22 per cent to US$208 million and earnings
before interest, tax, depreciation, amortisation and rentals (EBITDAR) up 30
per cent to US$979 million, a margin of 16 per cent of total revenues.
This marked the third successive year of net
profitability, in the airline’s tenth year of operation.
James Hogan, President and Chief Executive Officer
of Etihad Airways, said:
“This is another important step forward in
our journey as a growing, commercially successful business. We have hit every financial target for each
of the last seven years, bringing sustainable profitability to a business which
has grown from just US$300 million in revenues in 2005 to more than US$6
“We have delivered that through our unique
strategy, which has seen us combine industry-leading organic growth with
wide-ranging partnerships and minority equity investments in strategically
important carriers around the world.
“This journey has seen us evolve from a
highly successful airline into a growing aviation and travel group, with the
infrastructure and strategy to develop even further in our second decade.
“We are particularly pleased to deliver a
return for our shareholder, while also playing a major role in the development
of trade and tourism within the emirate of Abu Dhabi.”
Revenue increased by 27 per cent to US$6.1
billion (2012: US$4.8 billion), on passenger numbers up 12 per cent 11.5
million (10.3 million).
Revenue Passenger Kilometres (RPKs) –
measuring passenger journeys - increased by 16 per cent to 55.5 billion (47.7
billion), while Available Seat Kilometres (ASKs) – representing capacity - grew
by 17 per cent to 71.1 billion (61 billion).
These figures reflected strong growth in
passenger traffic volumes, in a year when Etihad Airways added six new
destinations – Washington DC, Amsterdam, Sao Paulo, Belgrade, Ho Chi Minh City
and Sana’a - and increased capacity on 18 existing routes. At year’s end, the
average network-wide seat load factor was 78 per cent, unchanged from 2012.
The airline has announced nine new
destinations for 2014 – the US cities of Los Angeles and Dallas-Fort Worth, the
European gateways of Rome and Zurich, Jaipur in India, Perth in Western
Australia, Phuket in Thailand, Medina in Saudi Arabia and Yerevan in
A key driver of Etihad Airways’ growth in 2013
was its partnership strategy, based on wide-ranging codeshares and its unique
approach of minority equity investments in strategically important airlines. This
has accelerated network growth, giving it the largest route network of any
Middle Eastern carrier, reaching almost 400 destinations; boosted sales and
marketing opportunities in key markets around the world; and allowed
significant business synergies and cost savings.
This strategy delivered revenues of US$820
million in 2013, up 30 per cent (US$629 million), and represented 21 per cent
of total passenger revenues for Etihad Airways.
Mr Hogan said: “Our codeshare partnerships
have been an important part of our business performance for the last seven
years. But it is our equity investments
which are really taking off now, allowing us to build integrated networks and
schedules, develop common products and services and most importantly, identify
business and cost synergies. These synergies are outstanding. Our joint purchasing taskforces are
delivering real and significant savings across all equity alliance members,
giving each of us real competitive advantage through lower unit costs.”
In addition to its four existing equity
partners – airberlin, Air Seychelles, Virgin Australia and Aer Lingus - Etihad Airways announced investments in three
additional carriers in 2013.
Regulatory approval was received in November to
acquire a 24 per cent stake in India’s Jet Airways. At year’s end, Etihad
Airways was awaiting regulatory approval for two other investments, a 49 per
cent stake in Serbia’s national carrier, Air Serbia (formerly Jat Airways) and
a 33.3 per cent shareholding in Darwin Airline, a regional carrier based in
In August, Etihad Airways formalised a
five-year contract to manage Air Serbia. Then, in November, Etihad Airways announced
the creation of a new sub-brand, Etihad Regional, which Darwin Airline would
become the first to adopt.
Etihad Airways also increased its stake in
Virgin Australia from nine per cent to 19.9 per cent through incremental
on-market purchases, after receiving approval mid-year from Australia’s Foreign
Investment Review Board. Etihad Airways demonstrated further support for Virgin
Australia by participating in its AUD$350 million capital raising.
Etihad Airways commenced seven new codeshare
partnerships in 2013, entering agreements with South African Airways, Kenya
Airways, Air Canada, Korean Air, Air Serbia, Belavia and Air Baltic, taking the
portfolio total to 47. Together with the equity partner airlines, these deals
increased the virtual network of Etihad Airways to almost 400 destinations.
Etihad Airways’ cargo division delivered a
standout performance in a stagnant air freight market, with cargo revenues up
30 per cent to US$928 million (US$716 million) on volumes up from 367,837 to 486,753
“This shows what focused business strategy
can deliver,” said Mr Hogan. “We have
identified cargo as a major growth opportunity for Etihad Airways and its
partners, and this will be a billion dollar business in 2014.”
In 2013, Etihad Airways also made important
investments in its long term business infrastructure, diversifying its
activities to ensure greater control over its own service standards and
In January, it acquired three subsidiaries of
Abu Dhabi Airports Company (ADAC) – Abu Dhabi Cargo Company (ADCC), Abu Dhabi
In-Flight Catering (ADIFC) and the ground handling business, Abu Dhabi Airport
Services (ADAS). From this investment,
Etihad Airways created a new wholly-owned subsidiary, Etihad Airport Services,
which now operates Etihad-branded ground handling, cargo and in-flight catering
services not only to support its own services, but those of other airlines at
the Abu Dhabi hub. This transaction transferred more than 4,000 new employees
to Etihad Airways.
In February, the airline concluded the
implementation of the SabreSonic information technology system as a single
platform for passenger services functions including websites, reservations,
airport check-in and baggage dispatch and retrieval. The partnership with
Dallas-based Sabre Airline Solutions represents a 10 year, US$1 billion
As well as improving the total product
delivered by Etihad Airways and increasing revenue opportunities, the 2013
investments and partnerships, including codeshares, enabled the company to
reduce costs and increase productivity.
In accordance with its shareholder mandate to
operate as a fully commercial entity, Etihad Airways continued to build its
portfolio of financing partners, increasing from 60 in 2012 to more than 70 in
2013. The airline raised US$2.14 billion
on the commercial markets in 2013, bringing its total to almost US$9 billion,
primarily for fleet development.
Etihad Airways also continued to strengthen
its risk management through active hedging against major variables including
foreign exchange, interest rates, jet fuel prices and carbon emission pricing.
“These financial institutions invest in
Etihad Airways because they understand our business model and the journey we
are on. They recognise a business which
grows organically and through acquisition, invests in long-term infrastructure
and business development, and identifies and mitigates risk across all areas,”
said Mr Hogan.
In 2013, the airline received 16 passenger
jets, of which 11 were new aircraft – six wide-bodied Boeing 777-300ERs, four
narrow-bodied Airbus A320-200s and the airline’s first Airbus A321.
There were also five wide-bodied Airbus
A330-200s obtained from Jet Airways, three of them leased and two purchased.
Etihad Cargo added three new freighters – two
Boeing 777-200Fs and one Airbus A330-200F. It also “wet leased” a Boeing
747-400ERF from KLM Royal Dutch Airlines, and a Boeing 747-8F from US operator
Atlas Air to replace two older aircraft.
In November, 2013, coinciding with its tenth
anniversary, Etihad Airways signalled its long-term growth intentions when it
announced the largest fleet order in its history, for up to 199 aircraft and
294 engines, at a current list price of approximately US$67 billion.
Firm orders were announced for 87 Airbus and
56 Boeing aircraft, with 56 options and purchase rights to support additional
growth opportunities, not only for Etihad Airways, but potentially for members
of its airline equity alliance. The new aircraft deals also include rights to
defer deliveries if required.
Combined with existing orders, including 41
Boeing 787 Dreamliners, 10 Airbus A380 super jumbos and 12 Airbus A350XWB
(extra wide body), the November fleet announcement increased the airline’s
pipeline of new aircraft on firm order to more than 220.
In 2014, Etihad Airways plans to introduce 18
new aircraft, including its first Boeing 787-9 Dreamliner and Airbus A380 super
jumbo, both of which are scheduled for delivery in the fourth quarter. The
airline also concluded late in December an agreement to acquire five Boeing
777-200LR jets from Air India to help accelerate network growth.
In addition to new aircraft to accommodate
traffic growth, Etihad Airways continued to invest heavily in new product
during 2013, with initiatives including luxurious new airport lounges in
Washington DC and Paris, new Business Class and First Class lounges in Abu
Dhabi, and the commencement of a program to introduce on-board Wi-Fi, mobile
phone connectivity and live television on board.
The airline also launched its Flying Nanny
service, introducing more than 750 cabin crew members who have been specially
trained to assist families travelling with young children.
A further measure of the airline’s growth was
the increased membership of the Etihad Guest loyalty program. In 2013,
membership numbers increased from 1.9 million to 2.3 million, up 21 per cent,
representing an average increase of 1,100 new members per day.
At the close of 2013, Etihad Airways employed
13,535 employees in the core airline business, an increase of 27 per cent over
the 10,656 in 2012. Including the new Etihad Airport Services subsidiary, the
group employed a total of 17,603 people from 142 nationalities.
Of this number, the core airline employs 1,468
UAE nationals, 17 per cent more than 2012. The Etihad Airways Emiratisation
program includes schemes for cadet pilots, engineers and graduate managers, in
sales and at airports.
“Against a difficult economic and
geopolitical environment, and fierce competition in key markets including the
Middle East, Europe, Asia, Australia and the Americas, the 2013 results mark an
outstanding performance,” said Mr Hogan.
“The global market remains challenging in
2014 but the macroeconomic picture is improving in key economies around the
world. We believe our new model, and the
investments we have made in product, service and infrastructure, mean that
Etihad Airways is positioned strongly for top-line growth and bottom-line
HIGHLIGHTS OF 2013
- Largest aircraft order in Etihad Airways’
history, with orders, options and purchase rights for up to 199 Airbus and
Boeing aircraft, valued at up to US$67 billion
- Acquired 24 per cent of India’s Jet Airways
- Secured five-year management contract with Air
Serbia, and announced intended acquisition of 49 per cent shareholding,
subject to regulatory approval
- Announced intended acquisition of 33.3 per
cent shareholding in Swiss regional
carrier, Darwin Airline, subject to regulatory approval
- Announced Etihad Regional brand
- Increased Virgin Australia equity from nine
per cent to 19.9 per cent, and participated in an AUD$350 million capital
- Integrated Air Seychelles and Air Serbia into
Etihad Guest loyalty program
- Acquired three businesses from Abu Dhabi
Airports Company and established Etihad Airport Services, with
Etihad-branded catering, ground handling and cargo divisions
- Commenced new passenger routes to Washington
DC, Amsterdam, Sao Paulo, Belgrade, Ho Chi Minh City and Sana’a
- Introduced additional flights to 18 existing
destinations in the GCC, Middle East, Australia, Africa, Asia, India,
Pakistan and Russia.
- Increased from 40 to 47 codeshare
partnerships, adding South African Airways, Kenya Airways, Air Canada,
Korean Air, Air Serbia, Belavia and Air Baltic
- Announced codeshares with Aegean Airlines and
Darwin Airline from early 2014
- Achieved 32 per cent growth in Etihad Cargo
freight volumes, a standout performance in a stagnant global air freight
- Expanded Etihad Cargo operations, including
new weekly round-the-world service with Boeing 747-8 freighter and flights
to other new destinations
- Won 18 awards including, for the fifth
consecutive year, title of “World’s Leading Airline” at the World Travel