By Shane McGinley
CEO of Abu Dhabi carrier warns eurozone crisis will pose 'stern threat' to aviation next year
Abu Dhabi’s Etihad Airways is banking on expansion into Africa and Asia and new codesharing tie-ups to grow its profits in 2012 and offset the pinch of global economic woes, its CEO said.
The state-backed airline sees the threat of a deep European recession as posing a “stern test” to the aviation market, and warned fast-growing Gulf carriers would not be immune to the impact.
“Although the brunt of austerity is expected to be felt in the eurozone and North America… airlines in the Middle East are certainly not immune to the effects of slowed growth in the West,” CEO James Hogan said in an emailed statement.
“[But] the financial strategies that we put in place as long ago as 2006 are maturing and delivering results, and we expect to deliver sustainable profitability [in 2012].”
The world’s airlines should brace for a steep fall in profitability next year, the market’s main industry body IATA said this month, slashing its net earnings forecast from $4.9bn to $3.5bn.
In the “worst case scenario” of the eurozone’s sovereign debt woes spiralling further into crisis, airlines could reported combined net losses of $8.3bn next year, IATA warned.
Etihad in July reported a 28 percent rise in revenue to $1.72bn for the first half of 2011, putting it on target to generate its first net profit in 2012. The airline has a fleet of 63 aircraft and flies to 86 destinations. It has successfully expanded its reach to a further 118 cities through 35 code-sharing partnerships, the latest of which was a link-up with China’s Hainan Airlines
Etihad has been linked in recent media reports to stake talks for Ireland’s Aer Lingus, British Midland International (BMI) and Germany’s Air Berlin, spurring speculation the carrier plans to use tie-ups to expand its global reach and bolster revenues.
Hogan said the airline planned to roll out new codesharing deals in 2012.
“We will continue our highly successful strategy of working closely with other carriers to maximise opportunities,” he said. “Ee will maintain the momentum next year as we take delivery of new aircraft, increase our workforce of 10,000 people and expand our network to destinations such as Shanghai and Nairobi, our first East African destination.”
Etihad this month ordered 10 Boeing 787-9s valued at $2.3bn at list prices in a deal that made it the largest operator of the Dreamliner. The UAE flag carrier also ordered two freighter versions of the 777 model for its cargo operations, taking the value of the deal at list prices to $2.8bn.
Etihad’s total stock of Dreamliners is currently 41, due for delivery in 2014 through to 2019. It also has options and purchase rights for a further 25 787s.