Etihad Airways recorded another major loss for 2018, although the company pointed to gradually improving results from its five-year transformation project.

The Abu Dhabi-based carrier reported a loss of $1.28 billion (it does not publish net profit/loss figures), compared to a deficit of $1.52 billion in 2017. It made the loss on revenue that dipped slightly to $5.86 billion, compared to $6 billion a year previously.

In a footnote to its results, Etihad noted that “results published for 2018 are for core airline operations only and exclude any extraordinary or one-off items.”

The company said the reduction in its annual loss followed a 4% increase in passenger yields, driven by capacity discipline, network and fleet optimization, together with a growing market share in premium and point-to-point markets.

That capacity discipline saw a 4% reduction in ASKs, to 110.3 billion, down from 115 billion in 2017. Passenger numbers also dropped, to 17.8 million compared to 18.6 million in 2017, while load factor slipped to 76.4%, down from 78.5%. Passenger revenue was static at $5 billion.

The state-owned airline said that its cargo division recorded a strong performance for the year “largely due to a lower cost base, [and] a program of efficiency improvements including the consolidation of the freighter fleet around the Boeing 777F.”

Cargo revenue was $827 million, down from $877 million in 2017. Cargo freight tonne kilometers decreased by 21% (from 4.3 billion to 3.4 billion) but saw a 15.5% increase in yields.

The airline reduced its total costs by $416 million to $6.9 billion. Direct operating costs were reduced by 3.6%, or $226 million, despite continuing fuel price volatility.

“In 2018, we continued to forge ahead with our transformation journey by streamlining our cost base, improving our cash-flow and strengthening our balance sheet,” Group CEO of Etihad Aviation Group Tony Douglas said March 14. “As a major enabler of commerce and tourism to and from Abu Dhabi, we are intrinsically linked to the continued success of the emirate.”

Etihad is undergoing a strategic change in direction, moving away from its previous policy of taking equity stakes in other carriers, which turned sour after the bankruptcy of airberlin and the continuing administration of Alitalia.

Another of Etihad’s equity partners, India’s Jet Airways, is in financial difficulties. The latter airline has grounded 25 aircraft because of missed lease payments.

The airline, while retaining Abu Dhabi as a major hub, is placing more emphasis on point-to-point services. There is increasing focus on the surrounding Gulf Cooperation Council nations, particularly Saudi Arabia, while India and China are major markets. Abu Dhabi is also increasingly trying to position itself as a tourism destination.

As part of its cost cuts, Etihad trimmed its route network in 2018, adding Baku (Azerbaijan) and Barcelona (Spain), but cutting nine destinations: Dallas / Fort Worth, Dar es Salaam (Tanzania), Dhaka (Bangladesh), Edinburgh (UK), Entebbe (Uganda), Ho Chi Minh City (Vietnam), Jaipur (India), Perth (Australia) and Tehran (Iran),

In February 2019, Etihad announced it was to trim significantly its outstanding orders with both Airbus and Boeing. Its existing fleet fell from 115 to 106 aircraft.

The airline said it is focusing on greater personalization of its offer to passengers. There will be a particular focus on its inflight retail offering, together with an unbundling of services and fares, and installation of new seats on both its widebody and narrowbody fleets.

In the 2019 second quarter, streaming technology will be introduced on the airline’s short-haul Airbus A320 and A321 fleets.

Alan Dron