Etihad Airways, the national carrier of the United Arabs Emirates (UAE) which began daily flights into Lagos from its hub in Abu Dhabi in 2012, has seen its financials increased in three years consecutively apart from enhancing links between Nigeria, Africa’s third largest economy, and the UAE, writes SADE WILLIAMS.
In 2012 July, Etihad Airways launched flight services between Lagos, West Africa’s most populous city, and Abu Dhabi with six flights a week with pessimism in some quarters that with the presence of other UAE airlines, it may not be able to go beyond that.
But almost a year after, the airline surprised pessimists by increasing from six flights to daily in 2013 as a result of its success on the route; coinciding with the start of the airline’s new summer schedule.
The services have significantly improved connections between Nigeria, the United Arab Emirates and beyond to key destinations across the airline’s network in Saudi Arabia, the Middle East, India, Malaysia and China.
Maurice Phohleli , General Manager and West Africa Nigeria for the airline at the celebration of its one year in Nigeria said: “We have received a very positive response from the Nigerian market since launching our service six months ago. Clearly, the people of Nigeria appreciate the superior product and service of the World’s Leading Airline and we are proud to serve them.
“There is a huge amount of international interest and investment focused towards Nigeria. Our fast growing global route network continues to prove popular for the large numbers of international traders and the business community flying between West Africa and the United Arab Emirates, and the major cities in North and Southeast Asia and the Indian Subcontinent.
“We also continue to support the growing leisure market out of Nigeria with the introduction of a range of special products and services dedicated to Nigerian holiday travelers. For example, our recently announced free 30-day UAE tourist visa and a special 50 per cent discount offer for children travelling with an accompanying adult,” he said.
The service comprised a mix of morning and evening departures and operated by an Airbus A330-200 aircraft configured to carry 22 Pearl Business class and 240 Coral Economy class passengers.
Etihad had since been slugging it out with its counters: Qatar Airways, Emirates and others which it met on the route as it continued to post increased net profits.
Current financials
Etihad Airways posted its third consecutive year of net profit showing a net profit up 48 per cent from $42 million to $62 million.
Total revenue was up 27per cent to $6.1 billion while alliance strategy performed strongly, with partnership revenues up 30 per cent to $820million, representing 21 per cent of passenger revenues.
Earnings before interest, tax, depreciation, amortisation and rentals were up 30 per cent to $979 million.
This marked the third successive year of net profitability, in the airline’s tenth year of operation.
Earnings before interest and tax were up 22 per cent to $208 million while revenue passenger numbers were up 12 per cent to 11.5 million.
According to James Hogan, president of the airline, Revenue passenger kilometres (RPKs) were up 16 per cent to 55.5 billion while Available seat kilometres (ASKs) was up 17 per cent to 71.1 billion.
“This is another important step forward in our journey as a growing, commercially successful business. We have hit every financial target for each of the last seven years, bringing sustainable profitability to a business which has grown from just $300 million in revenues in 2005 to more than U$6 billion today.
“We have delivered that through our unique strategy, which has seen us combine industry-leading organic growth with wide-ranging partnerships and minority equity investments in strategically important carriers around the world.
“This journey has seen us evolve from a highly successful airline into a growing aviation and travel group, with the infrastructure and strategy to develop even further in our second decade.
“We are particularly pleased to deliver a return for our shareholder, while also playing a major role in the development of trade and tourism within the emirate of Abu Dhabi.”
He said fleet increased from 70 to 89 aircraft adding that there was $67 billion order for up to 199 aircraft and 294 engines announced in November 2013.
He explained that 94 active passenger and cargo destinations, with new services to nine additional cities will commence in 2014.
“Equity alliance’ grows to seven airlines, Codeshare partners increased from 40 to 47 through partnerships, “virtual network” increased to almost 400 destinations and Etihad Cargo revenues were up 30 per cent to $928 million”, he said.
In accordance with its shareholder mandate to operate as a fully commercial entity, Etihad Airways continued to build its portfolio of financing partners, increasing from 60 in 2012 to more than 70 in 2013. The airline raised $2.14 billion on the commercial markets in 2013, bringing its total to almost $9 billion, primarily for fleet development.
It also continued to strengthen its risk management through active hedging against major variables including foreign exchange, interest rates, jet fuel prices and carbon emission pricing.
“These financial institutions invest in Etihad Airways because they understand our business model and the journey we are on. They recognise a business which grows organically and through acquisition, invests in long-term infrastructure and business development, and identifies and mitigates risk across all areas,” Hogan said.
Fleet and in-flight
In 2013, the airline received 16 passenger jets, of which 11 were new aircraft – six wide-bodied Boeing 777-300ERs, four narrow-bodied Airbus A320-200s and the airline’s first Airbus A321.
There were also five wide-bodied Airbus A330-200s obtained from Jet Airways, three of them leased and two purchased.
Etihad Cargo added three new freighters – two Boeing 777-200Fs and one Airbus A330-200F. It also “wet leased” a Boeing 747-400ERF from KLM Royal Dutch Airlines, and a Boeing 747-8F from US operator Atlas Air to replace two older aircraft.
In November, 2013, coinciding with its tenth anniversary, Etihad Airways signalled its long-term growth intentions when it announced the largest fleet order in its history, for up to 199 aircraft and 294 engines, at a current list price of approximately $67 billion.
Firm orders were announced for 87 Airbus and 56 Boeing aircraft, with 56 options and purchase rights to support additional growth opportunities, not only for Etihad Airways, but potentially for members of its airline equity alliance. The new aircraft deals also include rights to defer deliveries if required.
Combined with existing orders, including 41 Boeing 787 Dreamliners, 10 Airbus A380 super jumbos and 12 Airbus A350XWB (extra wide body), the November fleet announcement increased the airline’s pipeline of new aircraft on firm order to more than 220.
In 2014, Etihad Airways said it plans to introduce 18 new aircraft, including its first Boeing 787-9 Dreamliner and Airbus A380 super jumbo, both of which are scheduled for delivery in the fourth quarter. The airline also concluded late in December an agreement to acquire five Boeing 777-200LR jets from Air India to help accelerate network growth.
At the close of work in 2013, it was operating 91 aircraft fleet apart from the ones on order.
In addition to new aircraft to accommodate traffic growth, Etihad Airways continued to invest heavily in new product during 2013, with initiatives including luxurious new airport lounges in Washington DC and Paris, new Business Class and First Class lounges in Abu Dhabi, and the commencement of a program to introduce on-board Wi-Fi, mobile phone connectivity and live television on board.
The airline also launched its Flying Nanny service, introducing more than750 cabin crew members who have been specially trained to assist families travelling with young children.
A further measure of the airline’s growth was the increased membership of the Etihad Guest loyalty program. In 2013, membership numbers increased from 1.9 million to 2.3 million, up 21 per cent, representing an average increase of 1,100 new members per day.
At the close of 2013, Etihad Airways employed 13,535 employees in the core airline business, an increase of 27 per cent over the 10,656 in 2012. Including the new Etihad Airport Services subsidiary, the group employed a total of 17,603 people from 142 nationalities, including Nigeria.
As for in-flight entertainment, Etihad uses both the Panasonic eX2 and the Thales TopSeries i5000 in-flight entertainment system with AVOD (audio-video on demand) system on its new long-range aircraft and on some of its new A320-200 aircraft. Etihad brand this system as the “E-box”.
Etihad has signed a new 10-year agreement with Panasonic Avionics Corporation for the provision of in-flight entertainment which will include broadband internet and live TV.
Destinations/codeshare
The airline currently flies to about 96 destinations globally including eight destinations in Africa and the Indian Ocean: Johannesburg, Khartoum, Casablanca, Cairo, Nairobi, Lagos, Tripoli and Mahé in the Seychelles.
Etihad Airways continues to expand its network across Africa, and recently announced a number of strategic partnerships.
In February 2013, the airline announced a commercial partnership agreement with Kenya Airways, which allows it to codeshare on Kenya Airways flights from its gateway hub in Nairobi to a number of key destinations across East, Central and West Africa.
It signed a Memorandum of Understanding with South African Airways in May, allowing the two airlines to codeshare on each others’ networks.
James Hogan, the president
On 10 September 2006, James Hogan was appointed President and CEO of Etihad Airways, He has overseen Etihad’s rapid growth.
In July 2008, he signed one of the largest aircraft orders in history for 205 aircraft worth approximately $43 billion at list prices to meet the airline’s ambitious long-term growth plans. Etihad reported its first full-year net profit in 2011, of $14 million, in line with its strategic plan goals announced in 2006. In February 2013 the airline announced a net profit of $42 million for 2012.
He has overseen Etihad’s acquisitions of minority stakes in Air Berlin (29.21 percent), Air Seychelles (40 percent), Aer Lingus (2.987 percent), Virgin Australia (9.99 percent), Air Serbia (49%) and Darwin Airline (33 percent)
Hogan is a fellow of the Royal Aeronautical Society and a former non-executive director, and member of the Board’s Audit Committee, of the Gallaher Group. In 2010, he served as the chairman of the Aviation Travel and Tourism Governors at the World Economic Forum in Davos, Switzerland. He currently serves on the Executive Committee of the World Travel and Tourism Council. In June 2011 he was appointed to the International Air Transport Association (IATA) Board of Governors, and following the acquisition of a 29.21 percent stake Air Berlin, Europe’s sixth-largest airline; in December 2011, he was appointed Vice Chairman.
CEO Middle East Magazine named him Aviation CEO of the Year in 2008 and Visionary of the Year in 2010. He won the CAPA Airline Executive of the Year 2012 Award at the Centre for Aviation’s global awards for excellence and leadership in 2012.
