Although Etihad Airways has reported a strong start to 2020, following the suspension of flights to and from the UAE from 24 March, the airline has reported a half year operating loss of US$758 million, driven by a 38% drop in revenues, which stood at US$1.7bn. This was partially off-set by a 27% reduction in direct operating costs to US$1.9bn compared to US$2.7bn in the year-ago period, and a 21% reduction in general and administrative expenses to US$400 million, both driven by management cost containment initiatives and reduced operations.
Cargo revenues were US$490 million, up 37% compared to the same period in 2019, with 254,345 leg tonnes of cargo carried. This was driven by an increase in demand and a spike in cargo fares.
The airline saw a significant decrease in Q2 operating revenues following COVID-19 flight suspensions, with 70% of its fleet grounded. This period registered a 99% drop in passenger numbers and a 95% drop in ASK compared to Q2 2019. Seat load factor for this period was 16%, mainly driven by the operation of special (repatriation) flights, and the resumption of a limited network of transfer services via Abu Dhabi in early June.
Tony Douglas, Group Chief Executive Officer, Etihad Aviation Group, said: “While we have revised our outlook for the rest of 2020 based on current realities, we remain optimistic that as international borders re-open, we will increase our flying and carry more guests securely and with greater peace of mind, supported by the Etihad Wellness programme and our new Wellness Ambassadors. By September, we aim to increase our worldwide flights to half our pre-COVID-19 capacity.”
Etihad operated up to 40 of its fleet of 97 passenger aircraft in Q2, including Boeing 787 Dreamliners, 777-300ERs, and Airbus A320 family aircraft as belly-hold cargo freighters to complement Etihad Cargo’s operational fleet of six 777-200F freighters. Between 25 March and 15 June, over 640 special passenger flights were operated to 45 online and offline destinations, using the passenger cabins of these aircraft to fly foreign nationals out of the UAE, and to bring UAE nationals back home.
Adam Boukadida, Chief Financial Officer, Etihad Aviation Group, said: “A greater emphasis is being placed on a drive towards increased cost optimisation and efficiencies across the entire business to face the hurdles placed in our way by COVID-19. Our suppliers and partners have also worked closely with us, including the arrangement of payment holidays with lessors and savings discussions with all of our supply chain, so we can re-emerge stronger together.”
Throughout August and September, subject to the lifting of international restrictions and the re-opening of individual markets, the airline aims to fly to 61 destinations worldwide from its Abu Dhabi hub, operating approximately 50 per cent of its pre-COVID capacity.
Etihad has made redundancies and reduce salaries to cope with the situation.
Douglas adds: “Etihad, like all major airlines, has had no choice but to embrace the ambiguity of the situation it has been thrown into, and with much sadness, we have had to make some extremely difficult decisions to reduce the size of the workforce by several thousand.”
With most of its passenger aircraft on the ground, Etihad confirmed that it had embarked on the biggest aircraft maintenance programme in its history. The airline’s MRO division, Etihad Engineering, performed maintenance work on 97 passenger aircraft including 29 A320 and A321s, 10 A380s, 39 787s, and 19 777-300ERs. This ranged from minor maintenance tasks, such as seat repairs and updates to inflight entertainment systems, to bringing forward scheduled engine changes and modifications on several aircraft, reducing the need to withdraw them from service when scheduled services resumed. The extensive programme was additional to the routine maintenance which is carried out at regular intervals.