ABU DHABI- Etihad Airways on Thursday reported its third consecutive annual loss despite finding cost savings of nearly half a billion dollars as it cut its workforce and fleet.

The Abu Dhabi state-owned airline blamed challenging market conditions including higher fuel prices for a $1.28 billion loss in 2018, narrower than the $1.58 billion it lost in 2017.

Etihad, which has trimmed its ambitions to be a major intercontinental airline to focus on point-to-point flights, has made losses of $4.75 billion since 2016. 

Revenue fell nearly 4 percent to $5.86 billion last year, compared with the $6.1 billion it reported for 2017.

The airline launched a five-year turnaround strategy in 2017, the year current chief executive, Tony Douglas, was hired.

"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," Douglas, said in a statement.

Etihad said it slashed costs by $416 million in 2018, or 5.5 percent, as it cut its workforce by 5 percent to 21,855.

The number of passengers carried fell by 4.3 percent to 17.8 million as it cut the number of aircraft in its fleet by nine and stopped flying to several routes it said were unprofitable.

Etihad has been rethinking its business since 2016 after piling billions of dollars into a failed strategy of buying minority stakes in other airlines.

Dozens of aircraft orders with Airbus and Boeing worth billions of dollars have since been cancel led. 

(Reporting By Stanley Carvalho; editing by Emelia Sithole-Matarise) ((stanley.carvalho@thomsonreuters.com; + 9712 6444431; Reuters Messaging: stanley.carvalho.thomsonreuters.com@reuters.net))