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Etihad Airways reports strong start to 2020 with second quarter heavily impacted by COVID-19

Etihad Airways has provided details of its half-year (H1: January-June) 2020 performance, which saw a strong start to the year, with the airline progressing well ahead of its transformation plan targets. This included its best monthly results to date for February, prior to the impact of COVID-19, the subsequent closure of international borders, and the suspension of flights to and from the UAE from March 24.

H1 2020 performance

Etihad carried 3.5 million passengers in H1 (H1 2019: 8.2 million), a reduction of 58 per cent from the same period the previous year. Average seat load factor was 71 per cent. Core operating loss for this period increased by US$ 172 million to US$ 758 million (H1 2019: US$ 586 million), driven by a 38 per cent drop in revenues, which stood at US$ 1.7 billion (H1 2019: US$ 2.7bn). This was partially off-set by a 27 per cent reduction in direct operating costs to US$ 1.9 billion (H1 2019: US$ 2.7 billion), and a 21 per cent reduction in general and administrative expenses to US$ 0.40 billion (H1 2019: US$ 0.50), both driven by management cost containment initiatives and reduced operations. Available Seat Kilometres (ASK) reduced by 53 per cent to 23.69 billion (H1 2019: 50.35 billion).

Cargo revenues were US$ 0.49 billion, an improvement of US$ 130 million (37 per cent) 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 core operating result for the first three months of the year improved by 34 per cent, despite the onset of COVID-19, with a 12 per cent reduction in passenger numbers, and a 9.5 per cent reduction in ASK. Q1 seat load factor was 74 per cent (January’s performance was significantly stronger than the same month in 2019, with a seat load factor of 81.9 per cent), and yield at US$ 5.92 cents. Unit revenue in Q1 reduced by 3.3 per cent to US$ 4.14 cents (Q1 2019: US$ 4.28 cents), offset by continuous focus on driving down unit costs, which were reduced by 2.4 per cent to US$ 7.01 cents (Q1 US$ 7.18 cents).

However, the airline saw a significant decrease in Q2 operating revenues following COVID-19 flight suspensions, with 70 per cent of its fleet grounded. This period registered a 99 per cent drop in passenger numbers and a 95 per cent drop in ASK compared to Q2 2019. Seat load factor for this period was 16 per cent, 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, “Etihad faced a set of enormous and unpredictable challenges in the first six months of the year. We started 2020 strong, and recorded encouraging results as part of our continuing transformation programme. This left us in a relatively robust position when COVID-19 hit, allowing us to act with agility, and to mobilise all available resources as the crisis deepened, taking major steps to reduce costs through a wide-reaching series of measures.

“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. Looking forward, we rest assured that the UAE is leading the way in the research for a vaccine against COVID-19. The incredible efforts Abu Dhabi is making to ensure the safety and security of its residents and visitors will soon enable us to welcome the world back to our amazing home. This commitment was successfully highlighted by the recent hosting of major UFC events in the capital.”

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, “This year started strong, riding on the positive momentum gained in 2019, and by the end of the first quarter, the airline was on track to achieve a 2020 EBITDA of US$ 900 million (2019: US$ 453 million). Etihad managed to maintain a satisfactory level of liquidity despite a major drop in revenues, while continuing to raise new liquidity facilities supported by local and international financial institutions. This was supported by maintaining an ‘A with a stable outlook’ Fitch rating in April, at the height of the pandemic. Etihad was one of a small number of airlines to maintain its pre-COVID-19 credit rating.

“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.”

H1 2020 resultsQ1Q2H1 total
Passenger Revenue (US$ billion) 0.950.06 1.01
Cargo Revenue (US$ billion) 0.170.32 0.49
Operating Revenue (US$ billion) 1.230.44 1.67
Core Operating Result (US$ billion)(0.24)(0.52) (0.76)
Total passengers (million) 3.430.03 3.47
Available seat kilometres (billion)22.45 1.24 23.69
Seat load factor ( per cent) 74 per cent16 per cent 71 per cent
Cargo tonnage (leg tonnes ‘000) 143.3111.1 250.5

Network

Etihad is gradually resuming services to more destinations across its global network. This follows the easing of travel restrictions by UAE regulatory authorities on outbound and inbound travel for citizens and residents. All travel remains subject to the entry and health regulations set by the UAE authorities, and those at the end destination. 

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.

Subject to the applicable government approvals, Etihad’s summer schedule will feature a wider network and increased frequencies to the following destinations from, to, or via Abu Dhabi:

Middle East & Africa: Amman, Bahrain, Beirut, Cairo, Casablanca, Dammam, Jeddah, Kuwait, Muscat, Rabat, Riyadh, Seychelles  Europe: Amsterdam, Athens, Barcelona, Belgrade, Brussels, Dublin, Dusseldorf, Frankfurt, Geneva, Istanbul, London Heathrow, Madrid, Manchester, Milan, Moscow, Munich, Paris Charles de Gaulle, Rome, Zurich  Asia: Ahmedabad, Baku, Bangkok, Bengaluru, Chennai, Colombo, Delhi, Hyderabad, Islamabad, Jakarta, Karachi, Kochi, Kolkata, Kozhikode, Kuala Lumpur, Lahore, Male, Manila, Mumbai, Seoul, Shanghai, Singapore, Thiruvananthapuram, Tokyo  Australasia: Melbourne, Sydney  North America: Chicago, New York JFK, Toronto, Washington, D.C.