Etihad Airways reported a sharp improvement in its operating performance but still lost $1.52 billion in 2017, down from $1.95 billion in 2016.

Gulf carrier Etihad nonetheless hailed the 22% improvement in its losses as it a reported a 2% improvement in revenue to $6.1 billion.

The airline carried 18.6 million passengers last year, on a par with 2016 (18.5 million), and reported passenger revenue broadly flat at $5 billion.

The carrier reported: “Passenger and cargo yields improved as a result of capacity discipline, changes to the network – with an increased focus on point-to-point traffic – leveraging of technology and improving market conditions.”

However, the carrier’s fuel costs increased by $337 million year on year.

Etihad triggered the administration of Air Berlin and Alitalia last year when it terminated its investments in the airlines, replaced group chief executive James Hogan and launched a turnaround programme.

Hogan had led the airline since 2006.

Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said: “This was a pivotal year in Etihad’s transformation. We made significant progress.

“Our airline continues to be a key driver of Abu Dhabi’s vision to develop its tourism sector, grow commerce and strengthen links to key regional and international markets.”

Group chief executive Tony Douglas, who replaced Hogan, added: “We made good progress in improving the quality of our revenues, streamlining our cost base, improving our cash-flow and strengthening our balance sheet.

“These are solid first steps in an ongoing journey to transform this business into one positioned for financially sustainable growth.”

Etihad Airways chief executive Peter Baumgartner added: “Our transformation process has delivered tangible results to date.

“Passenger yields for the last quarter [of 2017] were up 9% versus the same period a year before. Operationally we continue to drive down costs.

The carrier took delivery of 12 new aircraft in 2017, including nine Boeing 787s and two airbus A380s, but retired 16 aircraft from its fleet to leave it with 115 aircraft.

It axed a number of services from Abu Dhabi, including those to and from Venice, Dallas/Fort Worth, San Francisco, Tehran, Jaipur and Entebbe.

However, Etihad launched to Baku in March 2018 and will add services to Barcelona from November.