Etihad Hit By 99% Fall In Passenger Numbers

posted on 7th August 2020 by Eddie Saunders
Etihad Hit By 99% Fall In Passenger Numbers

By Dominic Dudley, Forbes

Abu Dhabi-based Etihad Airways saw passenger numbers fall by 99% at the worst point in the coronavirus crisis, as most of its planes were grounded and almost all flights in and out of the UAE were suspended.

After several years of cost-cutting and restructuring to try and make the airline profitable, Eithad saw losses increase during the first half of the year by 29% and revenues drop 38%.

Etihad is the first of the big three Gulf carriers to release information about its performance during the pandemic. Emirates and Qatar Airways have yet to say how they have been faring. However, other nearby rivals have also been giving indications of just how tough conditions have been.

Last month, Turkish Airlines revealed its passenger numbers had slumped to 14.6 million in the first half of the year, down 58% compared to the same period last year. In June alone, its passenger numbers were down 85% year-on-year to 1 million (it has not released monthly figures for April or May, when the crisis was at its worst).

Empty planes

Before the coronavirus pandemic hit, Etihad claims it had been doing well, with its best ever monthly results to date for February. But with the closure of the country’s borders on 24 March, there was a dramatic change in its fortunes, which group chief executive officer Tony Douglas described in a statement released today as “a set of enormous and unpredictable challenges”

Over the first quarter as a whole passenger numbers were 3.4 million, down 12% compared to the same period last year, but in the second quarter the fall in passenger numbers reached 99%, with just 30,000 passengers flying on Etihad planes in this period. For most of the second quarter, the only passenger flights the airline operated were repatriation ones, flying foreign nationals out of the UAE and bringing local citizens back home. These flights were mostly empty though, with just 16% of the seats filled on average.

Over the first half of the year, Etihad carried 3.5 million passengers, a 58% fall compared to the first half of 2019 (and, coincidentally, the same fall suffered by Turkish Airlines). Revenues dropped from $2.7bn in the first half of 2019 to $1.7bn this time, while core operating losses climbed from $586m last year to $758m this year. The one bright spot was a 37% rise in cargo revenues to $0.5bn, driven by an increase in demand and a spike in cargo fares.

The airline has been sharply cutting costs in response to the crisis, with “several thousand” staff made redundant and others taking temporary pay cuts of 25-50%. Further cuts seem to be on the way. In the statement released today, chief financial officer Adam Boukadida said “A greater emphasis is being placed on a drive towards increased cost optimisation and efficiencies across the entire business.”

Rebuilding will take time. The airline expects to have half of its pre-Covid capacity operating by next month. “Etihad flew into the Covid-19 era with uncertainty but is re-emerging resilient, if a little battle-scarred,” said Douglas.