Photo: Etihad Airways
Etihad Airways, the young pretender in Middle East aviation, has underlined its rapid growth by reporting surging profits and confirming it is poised to take a significant stake in an Indian airline.The airline, which will mark its first full decade of operations this year, said profits had tripled from $14m in 2011 to $42m last year, a success the chief executive, James Hogan, attributed in part to savings, and revenue resulting from the “equity alliance” of stakes in four other airlines, notably airberlin and Virgin Australia.
That alliance looks set to expand, although Hogan would not comment on reports that it was set to buy 24% of Jet Airways, India’s second-largest carrier, for $330m, saying only that a proposal was before the board.
Passenger numbers broke through the 10 million mark in 2012. Although the average passenger yield fell slightly, Hogan said Etihad’s increasing load factor – its planes are now approaching 80% full – would allow them to charge more for a seat.
While Etihad, like the Manchester City football club it sponsors, was pushed to prominence by the Abu Dhabi chequebook, Hogan said it was a myth that the airline was bankrolled on royal largesse or cheap deals on Gulf fuel.
He pointed to a cumulative $6.8bn raised from global financiers, with a further $1.5bn being sought as Etihad moves to more than double its fleet of 70 aircraft.
Firm orders for 90 planes include 10 A380s and 41 Dreamliners, starting to arrive in 2014. Hogan was unworried by the current problems at Boeing with the 787, which he described as a “great aircraft”, adding: “That’s why I’m happy to be mid-queue – so others can work out the problems.”
The extra planes will be primarily deployed to the massively expanding markets of Asia, especially India and China, Hogan said. Etihad plans to expand its reach to a sixth continent with flights to São Paulo in Brazil among new destinations later this year.
Revenues grew at Etihad from $4.1bn in 2011 to $4.8bn as it added an extra 20% capacity on its flights, in the first full year of partnership with the German carrier airberlin. Etihad also has stakes in Air Seychelles and Aer Lingus.
Hogan has eschewed traditional airline alliances – partly, he admitted, because “when we started no one wanted to talk to us. They thought we were too small, or just another Gulf carrier.” But he said that the strategy of pursuing widespread codeshares and deeper equity partnerships with “collegiate CEOs” made more significant efficiencies through scale, and had contributed more than 1.2 million passengers to Etihad’s network. “It’s about driving passengers through the system, and progressively tackling costs together.”
Hogan said Etihad, which operates about 70% of traffic at Abu Dhabi airport, would benefit not only from the growth of the Middle East hubs as the crossroads of the world, but the transformation of Abu Dhabi itself into a “global city, a place to do business” and a leisure destination in its own right. The UAE has been seen as a safe haven for wealthy elites in the Middle East in the wake of political upheaval, while Abu Dhabi’s rapidly changing skyline will soon receive the addition of new Louvre and Guggenheim museums, alongside the brasher Emirati theme parks.
The airline’s results for the loss-making years before 2011 have not been published.
• The Guardian’s flights to Abu Dhabi were provided by Etihad
This article originally appeared on guardian.co.uk
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