Etihad Airways Annual Loss Narrows to Less Than $1 Billion

(Bloomberg) --

Abu Dhabi's Etihad Airways continued to make progress paring back its sprawling operation, shrinking the annual loss by about one third even as revenue declined.

The long-haul carrier has been overhauling its cost base since 2017 and turning its focus toward regional travel after splashing out to build a global network. While it's made progress, the airline still lost $870 million in 2019, bringing the deficit over four years to $5.67 billion. Revenue slid about 5% to $5.6 billion.

“An improvement to the cost base significantly offset the cost pressures faced by the business,” said Chief Executive Officer Tony Douglas. Load factor improved due to a reduction in network and capacity, he said.

Like airlines across the world, state-owned Etihad is now facing a jarring dropoff in travel because of the coronavirus outbreak. The company has temporarily halted flights to China and Hong Kong, and on Wednesday it asked cabin crew to take leave in April that would otherwise be scheduled for later in the year.

The airline sector in the United Arab Emirates, the Middle East's travel and business hub, is expected to undergo more turbulence after the government called on citizens and residents to avoid travel due to the coronavirus risk.

U.A.E. Tells Citizens, Residents to Avoid Travel Due to Virus

Despite the slowdown, Etihad on Thursday reiterated its plan to start a new low-cost carrier with Air Arabia in the second quarter. Air Arabia Abu Dhabi “will operate independently, complementing Etihad's network of routes from the Abu Dhabi hub,” Douglas said. It will face competition with another state-owned entity, Abu Dhabi Developmental Holding Co., which is starting a separate low-cost carrier with European discount specialist Wizz Air Holdings Plc. Wizz said this week the venture will begin service in the autumn.

More Results:

• Cumulative core operating performance improved by 55% since 2017
• Airline flies to 76 destinations, down from 85 in 2018
• Load factor 78.7% vs 76.4%
• Etihad's 10 gateways in India remain strong, despite the removal of capacity from Jet Airways

To contact the reporter on this story: Layan Odeh in Dubai at lodeh3@bloomberg.net

To contact the editors responsible for this story: Claudia Maedler at cmaedler@bloomberg.net, Anthony Palazzo, Andrew Noël

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