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Etihad Airways reports $1.9bn loss

Etihad Airways made a US$1.9 billion loss in 2016, blaming US$1 billion of losses on the costs of its aircraft fleet and a further US$800 million on the deterioration of its investments in Alitalia and Air Berlin.

The Abu Dhabi-based carrier reported a 9% increase in capacity over the year in which it carried a record 18.5 million passengers, up 900,000 on 2015, but it saw a fall of US$640 million in annual revenue to US$8.36 billion.

Etihad held a 49% stake in Alitalia, which entered bankruptcy protection in May when staff rejected a €2 billion package of cuts and redundancies, and retains a 29% holding in troubled German carrier Air Berlin.

In group financial results issued on Thursday, Etihad reported passenger revenue flat year on year at US$4.9 billion and a net loss of US$1.873 billion compared with a profit of US$103 million the previous year.

It blamed the fall in yield on “capacity pressures and the tough global economic climate”.

Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said: “A culmination of factors contributed to the disappointing results for 2016.

“The Board and executive team have been working to address the issues and challenges through a comprehensive strategic review, which includes a full review of our airline equity partnership strategy.”

This strategy was driven by former chief executive James Hogan, whose departure was announced in January.

However, Al Mazrouei stressed the continuing importance of Etihad to the Gulf state, saying: “The record passenger numbers in 2016 affirm Etihad’s role as a significant economic enabler for Abu Dhabi.

“Our airline business continues to support Abu Dhabi’s vision to develop tourism, grow commerce and strengthen links to key regional and international markets.”

Ray Gammell, the group’s interim chief executive, said: “We are focused on maintaining the solid performance of our core airline business – operationally and financially – amid difficult market headwinds.”

He described the current year as “challenging” for aviation and warned: “The competitive environment is likely to impact overall performance in 2017.”

Etihad Airways chief executive Peter Baumgartner said: “We are in an industry characterised by overcapacity, declining market sizes on key routes and changing customer behaviour as a weak global economy affects spending appetite.”

He reported yields “under pressure in all cabins, with business class impacted particularly as corporate travel policies continued to encourage flyers to downgrade to economy”.

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