Etihad Airways posts ninefold increase in first-quarter profits as travel demand soars

Etihad Airways recorded an almost ninefold increase in first-quarter profits, as the airline continues to expand its route network and carry more passengers amid soaring demand for air travel.

The Abu Dhabi airline posted after-tax profits of Dh526 million ($143 million) for the first three months of 2024, up from Dh59 million in the same period a year ago. It cited higher passenger revenue and lower financing costs for the increase.

Total revenue rose about 21 per cent year-on-year to Dh5.7 billion in the first quarter, driven mainly by a 25 per cent increase in passenger revenue.

Passenger traffic grew 41 per cent year-on-year to 4.2 million as Etihad Airways expanded its network to destinations including Thiruvananthapuram, Kozhikode and Boston.

Passenger load factor – a measure of how well an airline fills available seats – remained unchanged at 86 per cent during the three months.

First-quarter revenues are “equivalent to our total net income for the entire financial year 2023 as we continue our margin expansion journey”, said Etihad Airways' chief executive Antonoaldo Neves.

“This significant profit increase was achieved even with the holy month of Ramadan starting in early March this year, compared to late March last year, demonstrating the adaptability of our business.”

The airline usually announces half-yearly or annual operating gross. The quarterly earnings announcement comes after Etihad in March said it was preparing for a potential listing – a first for a major Gulf airline – as it pursues an ambitious growth strategy between now and 2030.

However, any decision about a possible listing would be made by the airline's owner, Abu Dhabi holding company ADQ, Etihad said at the time.

The airline is making “a lot of progress” in its management and transparency, which includes releasing quarterly earnings, Mr Neves told The National on Thursday.

“The shareholder mandate is very clear to us: Improve the service and have a sustainable company that is profitable,” he said.

“The mandate is to deliver an extraordinary customer experience and have a company that is self-funded and viable financially and economically speaking.”

A strong network, operational efficiencies, cost efficiencies and an “agile” team will enable the airline to deliver sustainable results, he said.

Etihad Airways said its cost per available seat kilometre (CASK) and CASK excluding fuel costs dropped by 9 per cent and 11 per cent in the first quarter.

Investor demand

Mr Neves, who led Brazilian airline Azul through an initial public offering in 2017, said that investors typically look into an airline's margin expansion for value creation.

“When investors look for an asset, they are concerned about future profitability and if you have a strategy that provides you with differentiation and you have a proven track record in delivering results … then that helps in the IPO story as well,” he said.

“When I did the Azul IPO, Azul had just become profitable. So the investors were buying the margin expansion story. Because if you buy only into the profitability, there's no value creation left.”

The Etihad boss said that any future IPO decision is up to the airline's shareholders and that his focus is devoted to margin expansion, growth and enhancing customer service.

The outlook

Looking ahead into the rest of the year, the outlook for summer travel is bright with “very strong” forward bookings for travel in June, Mr Neves said.

In March, Etihad Airways said it expects to exceed last year's annual profit of Dh525 million, in 2024.

Etihad’s operating fleet grew to 89 aircraft in the first quarter, from 75 in the previous year, including the addition of three new Boeing 787s in February this year. The airline's capacity in terms of available seat kilometres (ASKs) increased by 35 per cent year-on-year.