Etihad is in the midst of re-organizing its business. The airline that launched after Gulf Air eliminated its Abu Dhabi hub by hiring away Gulf Air’s CEO adopted a strategy of buying stakes in troubled airlines around the world and redirecting their connecting traffic through Abu Dhabi. But that didn’t work out very well — the available carriers were in some cases real basket cases and not candidates for turning around with new uniforms and group purchasing agreements.
When energy prices dropped the Al Nahyan family’s appetite for absorbing losses in exchange for growing an international hub airline ran out. They fired the CEO who architected this strategy and they turned the spigot off on air berlin and Alitalia. air berlin has gone out of business and Alitalia is in the midst of a government-subsidized fire sale.
Meanwhile the carrier has been cutting back on unprofitable flying elsewhere. With Air India flying non-stop to San Francisco their connecting traffic on San Francisco – Abu Dhabi was diminished and they elimiated the route. They’ve also eliminated Dallas Fort-Worth, since American Airlines dropped their codeshare arrangement. They’ve cut back on Los Angeles and New York JFK flying as well.
In addition there have been cutbacks in service.
- Chauffeur service outside the UAE is gone.
- They’ve sought to monetize lounge access while removing lounge amenities.
- Gone is ‘Style & Shave’ and food has been cutback in lounges.
- Meal and beverage services onboard have seen cutbacks as well.
- They’ve reduced the size of their fleet.
- They’ve had layoffs.
Now the airline has revealed the extent of its losses in 2017 $1.5 billion — following a $2 billion loss in 2016.
In a statement, the Abu Dhabi-based carrier said that it reduced administration and general expenses by 14 per cent over 2016, and that it cut unit costs by 7.3 per cent. This was despite the adverse impact valued at $337 million from higher fuel costs.
…Revenues in 2017 inched up to $6.1 billion, compared to $5.9 billion a year earlier, as total passengers carried by the airline rose marginally to 18.6 million from 18.5 million in 2016.
I continue to believe a merger with Emirates makes sense, along with a move to the new Dubai airport that’s closer to Abu Dhabi. Battling it out with a mega hub about an hour and a half’s drive away makes little continued sense.