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Etihad Airways reveals profit of US$ 73 million in 2014

Posted 28 May 2015 · Add Comment

Etihad Airways has achieved its strongest financial results to date in 2014, posting a net profit of US$ 73 million on total revenues of US$ 7.6 billion, up 52.1 per cent and 26.7 per cent respectively over the previous year.

The record performance, which marked the airline’s fourth consecutive year of net profitability, also saw earnings before interest and tax (EBIT) up 32.5 per cent to US$ 257 million. Earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR) were up 16.2 per cent to US$ 1.1 billion, representing a 15 per cent margin on total revenues. 

Etihad Airways’ financial statements are audited by KPMG and are in accordance with International Financial Reporting Standards (IFRS). 

James Hogan, President and chief executive officer of Etihad Airways, said: “Our shareholder has set a clear commercial mandate for this business and we continue to deliver against that mandate. Our focus is on sustainable profitability and our fourth year of net profits, at a time when we continue to invest in the new routes, new aircraft, new product and new infrastructure needed to compete effectively, shows we are serious about that goal. 

“Our performance in 2014 has cemented Etihad Airways’ position as a best-in-class, profitable and self-sustaining international airline. We have continued to grow, not just in size, reputation and performance, but also in maturity, evolving from an airline to a diverse global aviation and tourism group. This has been achieved through a unique strategy that combines industry-leading organic growth with wide-ranging partnerships and minority equity investments in other airlines around the world.” 

Etihad Airways carried a total of 14.8 million passengers in 2014, an increase of 22.3 per cent year-on-year. Revenue Passenger Kilometres (RPKs) – measuring passenger journeys - increased by 23.6 per cent to 68.6 billion (55.5 billion), while Available Seat Kilometres (ASKs) – representing capacity - grew by 21.8 per cent to 86.6 billion (71.1 billion). The growth in passenger demand and revenue over the 12-month period continued to outstrip Etihad Airways’ capacity increase, highlighting the strength of its long-term growth strategy. 

Passenger numbers were strengthened by the continued enhancement of Etihad Airways’ global network last year. The airline launched services to 10 new destinations in eight countries - Los Angeles, Dallas, San Francisco, Rome, Zurich, Medina, Yerevan, Jaipur, Phuket and Perth - and increased capacity on 23 existing routes. By the end of the year, the average network-wide seat load factor was 79.2 per cent, compared to 78.0 per cent in 2013. 

A key driver of Etihad Airways’ growth in 2014 was its partnership strategy, based on wide-ranging codeshares and its unique approach of minority equity investments in strategically important airlines. This has accelerated network growth, giving Etihad Airways the largest route network of any Middle Eastern carrier, reaching more than 500 destinations. It has boosted sales and marketing opportunities in key markets, as well as allowing significant business synergies and cost savings. 

This strategy delivered revenues of US$ 1.1 billion in 2014, an increase of 37.7 per cent (US$ 820 million), and represented 24 per cent of Etihad Airways’ total passenger revenues. 

In 2014, Etihad Airways received final approval for its 49 per cent investment in Air Serbia. It also invested €560 million to acquire a 49 per cent shareholding in New Alitalia, a 75 per cent interest in Alitalia Loyalty, which operates the MilleMiglia frequent flier program, and the future purchase of five pairs of London Heathrow Airport slots for lease back to Alitalia. The transaction became effective on 31 December 2014, after receiving European Commission merger clearance. 

Anyalst Saj Ahmad commented: “Etihad's continued profitability underlines it's strength in its dual organic and inorganic growth strategy by using its Aby Dhabi hub to pull in passengers. 

“With a sharp 26% rise in revenues, Etihad's has been able to expand its international footprint through its equity partners which has driven profit, passenger numbers and load factors. 

“The challenge to keep consistent growth comes not from the lack of airplanes, but the potential to be thwarted in new airport access, especially in light of complaints by US airlines about GCC airline expansion. 

“The recent product revamp for Etihad has been a tremendous success. It's Residence product on the A380 as well as the all-new 787-9 have help contribute to lower costs and better operational flexibility. 

He concluded: “Completion of the Midfield Terminal in the summer of 2017 will be the key to unlocking Etihad's future growth. That said, the robust growth here aptly demonstrates the vibrancy and maturity of the GCC market and the demand pull that Arab airlines like Etihad create - especially for higher yielding traffic.”

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