Etihad Airways has announced its strongest annual financial results to date, with a net profit of US$ 103 million on total revenues of US$ 9.02 billion.
The performance, which marked the airline’s fifth consecutive year of net profitability, also saw earnings before interest and tax (EBIT) of US$ 259 million, and earnings before interest, tax, depreciation, amortisation and rentals (EBITDAR) of US$ 1.4 billion, representing 16 per cent of total revenues.
James Hogan, president and CEO, Etihad Airways, said, “Our mandate is to build a sustainably profitable airline. A fifth year of net profits, with our best annual financial performance to date, shows that we are delivering against that goal. Our profitability demonstrates the success of our business strategy based on organic growth boosted by our partnerships, as well as operating profitability. We are building enterprise value across the airline and its many additional business streams.”
Etihad Airways’ financial statements are audited by Deloitte and are in accordance with International Financial Reporting Standards (IFRS).
The airline’s partnership strategy, based on almost 50 codeshare agreements and its strategic minority investments in selected airlines remained a key driver of its growth in 2015. A new codeshare agreement was introduced in 2015 with Pakistan International Airlines (PIA), while Etihad Airways’ existing codeshares with Air Serbia, American Airlines, flynas, Jet Airways, Korean Air, NIKI and S7 Airlines were significantly expanded. As a result, the airline now offers a combined passenger and cargo network of nearly 600 destinations through its 197 interline and 49 codeshare partnerships.
Etihad Regional was the latest addition to Etihad Airways’ equity partner network, which also includes airberlin, Air Seychelles, Jet Airways, Air Serbia, Alitalia and Virgin Australia. Etihad Airways’ stake in the latter increased to 25.1 per cent in 2015. Combined, the equity partners comprise the seventh largest global grouping of airlines, together flying more than 100 million guests worldwide.
The strategy has contributed to an increase in sales across Etihad Airways’ global network, delivering revenues of US$ 1.4 billion – an increase of 22.1 per cent over 2014 figures – and more than five million passengers onto Etihad Airways’ flights.
Hogan said that the airline’s return on its equity investments into the seven airlines was many times more than the money it had spent. He stated, “For an investment smaller than the cost of three new aircraft, we have been able to build our global network, attract five million new customers and US$ 1.4 billion of revenues, and share massive cost synergies. This is a two-pronged approach. From a strategic level, we are looking for the equity partners to bring network connectivity, generate additional revenues and create economies of scale. Each partner then has a P&L goal, which is the responsibility of its own management and boards of directors. Many of these, such as Air Serbia, Air Seychelles, Jet Airways and Virgin Australia, are now delivering on this level too.
“Even with an investment such as airberlin, where it has taken longer than expected for the airline to reach sustainable profitability, we are seeing strong returns directly into our business, far in excess of our original expectations. We have already received more than US$ 500 million in direct revenues to Etihad Airways and airberlin today delivers more than US$ 150 million a year in direct revenues, as well as wide-ranging cost synergies which have already reached more than US$ 100 million. In addition, the airberlin relationship is delivering a contribution of more than US$ 630 million a year to the Abu Dhabi economy. This is why we remain committed to the restructuring of that business as it moves forward.”
