Abu Dhabi carrier Etihad Airways plunged to a $1.9 billion (SR7.13 billion) loss last year, hit by impairments on aircraft and investments in troubled European airlines.
The loss, which compares with a net profit of $103 million a year earlier, was the first for one of the Middle East’s three largest airlines since it started making money in 2011.
Etihad booked one-off impairments of $1.9 billion for 2016 that included $1.06 billion on aircraft and $808 million on “certain assets and financial exposures to equity partners, mainly related to Alitalia and Air Berlin,” it said on Thursday.
Middle Eastern airlines have seen growth slow over the past two years as regional travel budgets tightened due to lower oil prices and a wave of militant attacks in Europe and Turkey weakened east to west traffic flows.
With fares also under pressure from stiff competition, Emirates, the region’s largest airline, reported in May its first decline in annual profit in five years,
State-owned Etihad has been undergoing a period of change, and has appointed Ray Gammell as interim group chief executive to replace long-serving chief executive James Hogan, who left the airline on July 1.
Hogan oversaw a rapid expansion in part by buying minority stakes in other airlines as Etihad raced to catch up with Emirates and Qatar Airways.
That strategy seemingly began to unravel in April when Italy’s Alitalia, Etihad’s most high profile investment, filed for special administration for the second time in less than a decade after workers rejected a rescue plan.
Etihad also sold its minority stake in a European regional carrier, Darwin Airline, the first divestment since it launched a strategic review last year. It continues to hold minority stakes in six other airlines.
Etihad’s revenue fell 7.1 percent to $8.36 billion last year, even though it carried 18.5 million passengers, up 5.1 percent on the year. Load factor — or number of seats filled — was down slightly to 78.6 percent.
“This year is just as challenging for the global aviation industry and the ever-evolving competitive environment is likely to impact overall performance in 2017,” Gammell said in a statement.
Etihad has cut 4 percent of overhead costs through layoffs and other measures as part of its strategic review, he added
source:Arab News