The bad news for Etihad Airways never seems to stop. The airline just reported a $1.28 billion loss for 2018. It’s the third consecutive annual loss for the Abu Dhabi-based carrier, even after it made significant cuts to operational costs and aircraft orders.
The airline lost $1.87 billion in 2016 and $1.52 billion in 2017. The loss is lower than in previous years, but revenue also fell, from $6 billion in 2017 to $5.86 billion in 2018. The airline is trying to spin this year as an improvement over previous years, noting that it had a 15% improvement in core operating performance, a 4% increase in passenger yields and a 3% reduction in unit costs.
In 2017, the airline put into place a five-year cost-cutting program in hopes to return to profitability. However, Etihad says it’s been hard to fully execute this plan because of rising jet fuel prices.
Costs were significantly reduced in 2018, with a total of $416 million being cut, and Etihad’s management plans on continuing to make the airline more efficient. It cut nine unprofitable routes, including Abu Dhabi (AUH) to Dallas (DFW), but still took delivery of three Boeing 787-9s, four 787-10s and one 777-200 freighter. Etihad also said it continues to focus on unbundling services and fares — meaning flyers should get ready for more basic economy-style fares.
Tony Douglas, CEO of Etihad Aviation Group, seemed to appeal in a statement to the government that owns the airlline. “As a major enabler of commerce and tourism to and from Abu Dhabi, we are intrinsically linked to the continued success of the emirate,” he said.
The annual financial report comes soon after the airline announced it would effectively be canceling 76 orders for wide-body aircraft, including 57 Airbus A350s and 21 Boeing 777Xs. It’s axed other routes, flight frequencies and employees since it began taking financial solvency more seriously.
A series of poor investments in other struggling airlines hurt Etihad’s profits. These include cash injections into bankrupt Alitalia and ailing Jet Airways, in addition to Air Berlin, which completely shut down in 2017.
There have been murmurings about Etihad joining Star Alliance and ending its partnership with American Airlines, but that has yet to come to fruition. Meanwhile, its competitor and neighbor, Emirates, has been eyeing a takeover of Etihad, something that however Emirates has denied repeatedly.
And for those hoping to use miles on the carrier for its fantastic first-class products, the airline says it “continues to refine” its business and first-class services. Hopefully, that means fewer cuts to its premium services.
Featured image by Alberto Riva/TPG.