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29 March 2024

Etihad sees break-even in 2011

The former Gulf Air chief, an Australian, hit out at critics who accuse Etihad of being subsidised by the government of Abu Dhabi. (SUPPLIED)

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By Staff

Etihad Airways expects to make profits next year for the first time since it was launched nearly seven years ago while passengers handled by the carrier is projected to surge by one million, its chief executive has said.

James Hogan said Etihad, owned by the Abu Dhabi government, could have achieved earnings before interest and tax (EBIT) if air traffic worldwide had not been jolted by the 2008 global fiscal crisis.

In an interview with the Britain-based Flightglobal bulletin, Hogan said no other airlines in history had grown as fast as Etihad in a period of seven years.

“No one in the history of aviation has started this fast…we will move into the black for the first time in 2011…we would have been in positive EBIT this year had it not been for the global financial crisis,” he said.

The former Gulf Air chief, an Australian, hit out at critics who accuse Etihad of being subsidised by the government of Abu Dhabi.

“We had start-up capital but our owners expect a return on capital. We have to raise finance. My focus on return on capital and profitability is as aggressive as any airline I’ve worked in,” he said.
He also denied that Etihad, which marked its seventh year in November, gets privileged treatment at its Abu Dhabi hub.

Although operator Abu Dhabi Airport Company is also government-owned, Hogan said Etihad, which represents 60 per cent of traffic at Abu Dhabi International airport, is “no more favoured than British Airways, Cathay Pacific or Singapore Airlines are at their domestic bases.”

“Instead, Etihad benefits from not being encumbered by the high legacy costs of its international rivals. We are not bound by infrastructure that is 50 years old, or 50-year-old scope agreements. They take a long time to change.”

With a 57-strong fleet and the first deliveries of a record-breaking commitment for 200 aircraft placed at the 2008 Farnborough air show beginning to arrive, Hogan believes Etihad is “getting to a point where economies of scale are kicking in.”

He said air traffic has sharply grown over the past months as the industry pulls out of the global downturn, adding Etihad could hit a record activity this year.

“This year’s expected total of 7.3 million passengers compares with 6.3 million in 2009, with load factors up from 74 per cent last year to an expected 77 per cent for 2010. The airline has added five new routes this year,” he said.
“The growth out of India and China in the past six months has been extraordinary. We are exceeding our business plan,” he added.

Etihad earlier this year added two Airbus A330-200Fs to its fleet, taking its dedicated cargo fleet to six, and launched scheduled freight services to Hong Kong, Beijing, Erbil, N’djamena, Narita and Nagoya.

On October 31, Etihad began its first all-economy services with an Airbus A320 configured with 162 seats to Alexandria, Columbo, Damascus, Thiruvananthapuram, Calicut and Peshawar.

Hogan said such a development was not a move into the low-cost market, but rather a way of “deploying the asset where there’s going to be the best return”.