Etihad Airways has posted a US$1.87 billion annual loss, revealing the full extent of the pressures facing Persian Gulf carriers as they grapple with the impact of terrorism on global traffic flows and a low oil price that’s crimped local travel.
The 2016 loss came after Abu Dhabi-based Etihad booked a US$1.06 billion charge from writing down the value of aircraft and a further US$808 million hit from the reduced value of stakes in so-called 'equity partners' including struggling Air Berlin and Italy’s Alitalia, which filed for bankruptcy in May.
The earnings reversal, revealed Thursday, comes after Dubai-based Emirates, the biggest Gulf carrier and the world’s largest long-haul airline, in May reported its first annual profit decline for five years.
Mideast airlines are facing the first serious challenge to years of breakneck expansion that have seen them exploit their position at a natural crossroads to win a major share of the lucrative inter-continental travel market.
“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,” Ray Gammell, interim chief executive officer of Etihad Aviation Group, said in a statement.
The company didn’t publish full group numbers, and the hit from partners includes only the impact of commercial ties rather than losses there.
Etihad is continuing to implement group-wide changes as part of a strategic review, Gammell said, as well as assessing its minority holdings following an exit from the Swiss-based Etihad Regional airline last week.
The group is also continuing its search for a permanent CEO following the departure of Australian James Hogan, who hatched the investment strategy to catch up with rivals Emirates and Qatar Airways.
Yields, a measure of fares, fell 8 percent in the year, Etihad said. Prices dropped across all cabins, with business class worst hit as some premium travelers downgraded to economy with crude still in the doldrums.