Etihad Airways on course to break even by 2010

ON COURSE: Etihad said it was on target to break even by 2010.

Abu Dhabi-based Etihad Airways is on target to break even by 2010, a company executive told ArabianBusiness.com on Tuesday.

Speaking at the Arabian Travel Market (ATM) in Dubai, Geert Boven, executive vice president, sales and services, said while the UAE’s national carrier was not announcing financial results yet, the company was confident of hitting its economic targets.

“We are very much in the startup phase - which requires a lot of investment - and we are looking forward to breaking even in 2010,” Boven said.

Boven said rocketing oil prices were a “huge concern” for Etihad since fuel prices represented about 30% of its total costs; however the airline had implemented a successful fuel hedging programme to combat the problem.

“We have been looking at the oil market and buying fuel about one year and a half in advance. We hedge 10-5% in advance, and this guarantees us against rising fuel prices,” he said.

Boven said he agreed with recent comments from Dubai Airports' chief that there is an urgent need for more civil airspace in the region.

RELATED: Lack of GCC airspace capacity threatens Dubai's growth

“Airspace in the Middle East is congested but there is a lot of military airspace in the region, so it’s a matter of negotiation and lobbying with governments for more airspace to be free for civil aviation,” he said.

A lack of available airspace could impact future growth, especially with the increasing number of flights from the UAE to India, the Far East and Europe, he warned.

“There is an absolute need for increased airspace and if we cannot get sufficient airspace then logically it will have an impact of the growth of the airlines in the region.”

Boven said Etihad was so far unaffected by Airbus’ ongoing problems with its A380 superjumbo, which is being plagued by delivery problems.

RELATED: Mideast airlines face further A380 delay

Dubai's Emirates, the biggest A380 customer, and Etihad both confirmed they had received the warnings.

The carrier has ordered four A380’s with two to be delivered in 2013, and a further two in 2014.

“The A380 was initially delayed so we further delayed our delivery to bring in more wide-bodied aircraft to expand our destinations and frequencies first. We don’t know what will happen in 2013/2014. They may need to delay further, but we are not going to as affected as others,” he said.

It came to light on Tuesday that Airbus has warned customers they may face more delays on delivery of the A380, which is already two years behind schedule.

Boven said Etihad has no plans to follow in Emirates' footsteps and launch a budget airline, since it is focused on the high end market.

Dubai said in March it plans to start a low-cost carrier within a year to tap travel demand in the Gulf.

RELATED: Dubai to launch low-cost airline

“Never say never, but for the time being, we are concentrating on operating in the premium segment of the market. There might be an all economy carrier but based on market demand now, it will be no time soon,” he said.

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