"This was partially off-set by a 27 per cent reduction in direct operating costs to $1.9 billion as against $ 2.7 billion for the same 2019 period, and a 21 per cent reduction in general and administrative expenses to $0.40 billion, both driven by management cost containment initiatives and reduced operations. Available seat kilometres declined by 53 per cent to 23.69 billion from 50.35 billion in 2019 first half," the airline said.
Tony Douglas, group CEO, Etihad Aviation Group, said the carrier faced "a set of enormous and unpredictable challenges" in the first six months of the year. "We started 2020 strong, and recorded encouraging results as part of our continuing transformation programme. This left us in a relatively robust position when Covid-19 hit, allowing us to act with agility, and to mobilise all available resources as the crisis deepened, taking major steps to reduce costs through a wide-reaching series of measures."
He said the airline remained optimistic that as international borders re-open, it will increase flying and carry more guests securely and with greater peace of mind while revising its outlook for the rest of 2020 based on current realities. "By September, we aim to increase our worldwide flights to half our pre-Covis-19 capacity. Looking forward, we rest assured that the UAE is leading the way in the research for a vaccine against Covid-19. The incredible efforts Abu Dhabi is making to ensure the safety and security of its residents and visitors will soon enable us to welcome the world back to our amazing home."
Douglas said due to the severity of the situation facing the industry, the airline has been forced to redesign the organisation around the need to make redundancies from its workforce across several areas of the business to ensure future continuity. Temporary company-wide salary sacrifices of 25 per cent to 50 per cent were also introduced. "Etihad, like all major airlines, has had no choice but to embrace the ambiguity of the situation it has been thrown into, and with much sadness, we have had to make some extremely difficult decisions to reduce the size of the workforce by several thousands."
Etihad operated up to 40 of its fleet of 97 passenger aircraft in Q2, including Boeing 787 Dreamliners, 777-300ERs, and Airbus A320 family aircraft as belly-hold cargo freighters to complement Etihad Cargo's operational fleet of six 777-200F freighters. Between 25 March and 15 June, over 640 special passenger flights were operated to 45 online and offline destinations, using the passenger cabins of these aircraft to fly foreign nationals out of the UAE, and to bring UAE nationals back home.
Adam Boukadida, chief financial officer, Etihad Aviation Group, said the airline managed to maintain a satisfactory level of liquidity despite a major drop in revenues, while continuing to raise new liquidity facilities supported by local and international financial institutions. "This was supported by maintaining an 'A with a stable outlook' Fitch rating in April, at the height of the pandemic. Etihad was one of a small number of airlines to maintain its pre-Covid-19 credit rating."
Saj Ahmad, chief analyst at StrategicAero Research, transforming oneself from a loss position to profitability becomes even harder for all airlines during these turbulent times. "Battered by the impact of the pandemic, it is not a surprise to see Etihad's losses rise in the first half. With weaker load factors and a colossal drop in revenue due to international travel restrictions and lockdowns in key markets across Europe, Asia and the USA, Etihad has still managed to suppress and drive down some of its operating costs," he said.
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