Etihad Impairments Push It To Huge Loss
Etihad Airways announced a loss of USD$1.87 billion for 2016 as impairment charges on aircraft and financial exposure to equity partners contributed to the loss.
The Abu Dhabi-based carrier’s total revenue in the 2016 financial year was $8.36 billion, down from $9 billion the previous year. It made a $103 million net profit in 2015.
Total impairments of $1.9 billion included a charge on aircraft of $1.06 billion, reflecting lower market values and the phasing out of some aircraft types early. There was also a charge of $808 million on some assets and financial exposure to equity partners, mainly Alitalia and airberlin.
Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said “A culmination of factors contributed to the disappointing results for 2016.”
He said the board has been working on a “comprehensive strategic review aimed at driving improved performance across the group, which includes a full review of our airline equity partnership strategy.”
The airline owns 49 percent of Alitalia, and has a 29 percent stake in airberlin. Alitalia filed for bankruptcy in May.
Etihad carried 18.5 million passengers in 2016, a 5.1 percent increase, but passenger revenue was flat at $4.9 billion.
RPK passenger traffic increased by 7.6 percent on an ASK capacity increase of 8.7 percent. Seat load factor dropped 0.8 of a percentage point to 78.6 percent. Etihad said yields fell 8 percent largely due to capacity pressures and the global economic climate. The lower yield was partially offset by an 11 percent drop in unit costs.
“This year is just as challenging for the global aviation industry and the ever-evolving competitive environment is likely to impact overall performance in 2017,” interim group chief executive Ray Gammell said.