Abu Dhabi’s Etihad Airways says it is continuing to target a “complete turnaround” within two years despite reporting a $1.7 billion loss for 2020. The government-funded airline blamed the near-record loss on a 76 per cent drop in annual passenger numbers because of pandemic-related travel restrictions.
For the past few years, Etihad has been trying to recover from a disastrous equity investment scheme in which the airline took stakes in several foreign airlines which went onto collapse or only survive with the help of taxpayer-funded bailouts – including Alitalia and airberlin.
Since recording a record loss of $1.87 billion in 2016, the national carrier of the United Arab Emirates (UAE) had narrowed its losses to $870 million in 2019. Under the leadership of British chief executive Tony Douglas, Etihad had already planned to unwind an ambitious and rapid growth strategy in order to stem the mounting losses.
The airline was, however, hit hard when the government of Abu Dhabi introduced some of the toughest COVID-19 border restrictions in the world. There was a total suspension of passenger services into and out of the UAE between the end of May 2020 and the beginning of June as authorities tried to control the spread of the virus.
The total flight ban was followed by a ban on tourists entering Abu Dhabi, along with quarantine restrictions for residents and visitors who were allowed to enter the emirate. Many of these restrictions were only lifted at the end of last year.
As a result, Etihad says it carried just 4.2 million passengers last year – 80 per cent of whom flew with the airline in the first three months of 2020 and before the pandemic grounded airlines around the world.
Losses were offset by a near 40 per cent drop in operating costs, as well as a near two-thirds rise in cargo revenue as governments scrambled to get hold of medical equipment and the world took to online shopping during lockdown.
[speaker-voice name=”en-GB-Wavenet-B”]“Covid shook the very foundation of the aviation industry,”[/speaker-voice] Douglas commented while thanking the Abu Dhabi government for helping the airline survive the crisis with its “support” – Etihad has not said how much money Abu Dhabi has injected into the airline to help it through the pandemic. [speaker-voice name=”en-GB-Wavenet-B”]“While nobody could have predicted how 2020 would unfold, our focus on optimising core business fundamentals over the past three years put Etihad in good stead to respond decisively to the global crisis,”[/speaker-voice] Douglas continued.
Etihad was already positioning itself to become a much smaller airline but the pandemic has accelerated some of those plans. The airline laid off around a third of its entire workforce, although some workgroups were more affected than others – the number of cabin crew more than halved to 2,370 crew according to the latest figures released by the airline.
Last month, Etihad said it had become the first airline in the world to only operate flights with pilots and cabin crew who are full vaccinated against COVID-19. The airline has bet big on vaccination status being a factor for passengers when they book a flight, although it’s still too early to say whether it will impact booking decisions.
