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Etihad Airways says it lost $1.87 bn in 2016

AFP , Thursday 27 Jul 2017
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Abu Dhabi's Etihad Airways said Thursday it posted a $1.87 billion loss last year, hit by "one-off" impairments on aircraft and investments in troubled Alitalia and airberlin.

The government-owned carrier said total impairments amounted to $1.9 billion, including a $1.06 billion "charge on aircraft, reflecting lower market values and the early phase out of certain aircraft types."

"There was also an $808 million charge on certain assets and financial exposures to equity partners, mainly related to Alitalia and airberlin," the company said.

Old fuel-hedging contracts also hurt the carrier's results, Etihad said, adding that their financial impact is expected to diminish this year.

"A culmination of factors contributed to the disappointing results for 2016," said Mohamed al-Mazrouei, chairman of the board of Etihad Aviation group.

Launched in 2003, Etihad has expanded rapidly and bought minority stakes in carriers around the world as it increased its share of global travel along with larger Gulf rivals Emirates and Qatar Airways.

Etihad owns 49 percent of Alitalia, 29 percent of airberlin, 40 percent of Air Seychelles, 19.9 percent of Virgin Australia and a 24-percent stake in India's Jet Airways. It also has a 49-percent share of Air Serbia.

Alitalia went into administration in May after staff rejected job and salary cuts which management had proposed as a condition for injecting new funds under a two-billion-euro rescue plan for the loss-making Italian carrier.

Meanwhile, losses incurred by the German carrier airberlin over the past two years amounted to 1.2 billion euros ($1.4 billion).

Etihad said its total revenues dropped from $9.0 billion in 2015 to $8.36 billion, while passenger numbers increased from 17.6 million to 18.5 million.

"We are in an industry characterised by overcapacity, declining market sizes on key routes, and changing customer behaviour as a weak global economy affects spending appetite," said Etihad Airways chief executive Peter Baumgartner.

In 2015, Etihad had posted a 41-percent surge in its net profit, to $103 million, on the back of rising passenger numbers and cargo volumes.

But in December last year, Etihad said it had begun cutting jobs in a restructuring process to reduce costs due to tough competition and a weaker global economy.

James Hogan stepped down from his post as the group's chief executive officer this year after leading Etihad for more than a decade.

Oil-exporting Gulf countries have felt the economic pinch as their revenues nosedived after crude price tumbled from above $100 a barrel in early 2014.

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