DUBAI: Etihad Airways is on track to become a “sustainable and profitable” business after halving its operating loss in the first six months of 2021 as it reduced costs and expanded its network and cargo business, even as Covid-19 variants hamper a recovery in global air travel, its chief executive said.
The airline’s cargo revenue jumped 56 per cent year on year in the first half of 2021 to $800 million as it carried 365.5 tonnes of freight, an increase of 44 per cent from the same period a year ago, the carrier said on Tuesday, report agencies.
Air freight has been a rare bright spot for the global aviation industry during the Covid-19 pandemic that has forced airlines to ground their fleet, lay off staff and seek government bailouts.
Cargo revenue has been a lifeline for many airlines globally facing travel restrictions and more contagious variants of the virus that have affected international passenger traffic.
Global demand for air cargo grew by 8 per cent in the first half of 2021, above pre-crisis levels, making it the strongest half-year growth since 2017 when the industry posted 10.2 per cent year-on-year growth, according to the airline lobby group International Air Transport Association.
“While market demand has been slower to recover than anticipated, our record cargo performance has continued to buoy the business,” said Adam Boukadida, Etihad’s chief financial officer.
The Abu Dhabi airline narrowed its core operating loss in the first half of its fiscal year to $400m, down from about $800m in the same period last year on the back of lower operating costs and strong cargo performance.
The state-owned airline, which is executing a five-year turnaround plan, slashed operating costs by 27 per cent year on year to $1.4bn.
Reduced capacity and volume-related expenses helped to cut operating costs, it said. Fixed overheads fell by 22 per cent year on year to $3bn while finance costs were down 22 per cent due to “an ongoing balance sheet deleveraging”, Etihad Airways said.
“As a result, the airline managed to rebuild its liquidity position to pre-pandemic levels,” it said.
The airline’s earnings before interest, taxes, depreciation, and amortisation, or Ebitda, were $1bn in the first half of 2021, compared with an Ebitda loss of $1bn in the same period last year.
However, passenger traffic fell by 66.6 per cent due to the Covid-19 pandemic. The airline carried 1 million passengers in the January to June period, fewer than the 3 million passengers it carried in the first half of 2020.
Seat load factors – a measure of how well the airline fills available seats – fell to 24.9 per cent during the period, from 71 per cent a year ago.