Tuesday, Apr 03, 2012
-First-quarter revenue rises 28% to $989 million
-Airline flies 2.36 million passengers, up 27% from first quarter last year
-CEO says economic conditions are challenging as fuel prices rise
-Airline eyeing expansion of short-haul business with new aircraft order - analyst
(Adds detail and background throughout)
By Alex Delmar-Morgan
Of ZAWYA DOW JONES
DOHA (Zawya Dow Jones)--Etihad Airways, the airline owned by the oil-rich emirate of Abu Dhabi, Tuesday said revenue rose 28% in the first quarter to nearly $1 billion as it flew more than two million passengers on its expanded network.
First-quarter revenue rose to $989 million from $770 million, while the airline flew 2.36 million passengers, up 27% on year, with 67 aircraft in service compared with 57 a year earlier, Etihad said. The airline didn't disclose quarterly profit data.
The nine-year-old carrier, which competes regionally with Dubai's Emirates Airline and Qatar Airways and turned a profit for the first time last year, hit its revenue and cost targets despite challenging economic conditions, Chief Executive James Hogan said.
Etihad's growth contrasts with the troubles facing many of its European rivals, such as Air France-KLM (AF.FR) and Deutsche Lufthansa (LHA.XE), as high fuel prices and the competition from Middle East airlines internationally and budget carriers on short-haul routes play havoc with their performance.
"Despite the tough economic times we believe our business model of organic network growth combined with codeshare partnerships and strategic equity investments will enable us to continue to prosper and ensure sustainable profitability," Hogan said.
"Fuel prices are our largest variable cost and they are tracking higher than 2011," he added. Etihad has hedged 74% of its fuel costs for 2012, he said.
Flush with petrodollars from the Abu Dhabi government, Etihad said in January it would pay $20 million for a 40% stake in Air Seychelles. The airline increased its holding in German carrier Air Berlin PLC (AB1.XE) to 29% in a EUR73 million deal in December.
"Our equity investments, in Air Berlin and Air Seychelles, are already bearing fruit and we are starting to see both revenue and cost benefits from synergies with each carrier," Hogan said.
Etihad also announced further route expansions, including a debut launch into South America next year and a new service to Vietnam. More frequent flights are planned to Asia and Australia, it said.
The carrier will take delivery of seven new aircraft in 2012--three Airbus A320s and four Boeing B777s--that will see its fleet size hit 71 by year-end, it said.
"It's interesting they are working on expanding their A320 fleet," said Andrew Charlton from Geneva-based consultancy Aviation Advocacy. "They are short-haul aeroplanes, so they are building up a short-haul network as well," Charlton said.
Etihad's passenger load factor rose to 76.5% in first quarter from 72.7% a year earlier. Cargo revenue advanced 12% to $159 million as it made better use of cargo capacity on passenger flights to destinations like Dusseldorf, Shanghai, and Tripoli, Etihad said.
Etihad, Emirates Airline and Qatar Airways are among the three fastest growing airlines in the world, each with ambitions to create global aviation hubs in the Middle East. More established carries in the U.S. and Europe have complained of unfair competition. They allege the airlines receive state subsidies and tax-breaks, something that Middle East companies deny.
-By Alex Delmar-Morgan, Dow Jones Newswires; +974 6659 9818; alex.delmar-morgan@dowjones.com
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(END) Dow Jones Newswires
03-04-12 1005GMT
