Etihad preparing to be IPO-ready and expects to beat 2023 profit this year, CEO says

Abu Dhabi-based airline's profit grew more than fivefold to $143m last year

Antonoaldo Neves, chief executive of Etihad Airways, said the airline plans to hire up to 2,000 pilots, cabin crew, mechanics and engineers this year. Chris Whiteoak / The National

Etihad Airways expects to exceed last year's annual profit in 2024 and is preparing for a potential listing - a first for a major Gulf airline - as it pursues an ambitious growth strategy between now and 2030, its chief executive has said.

"What’s really important is that Etihad is ready to IPO whenever it is a good time for an IPO ... we’re working very hard towards that goal," Antonoaldo Neves told The National.

"We have been improving our governance, we have been improving our ESG [environmental, social and corporate governance] practises, we have been improving our profitability, we have been strengthening our balance sheet.

“So, whenever is the right time for the shareholder – and that’s for the shareholder to decide – my obligation as the CEO and the obligation of the company is to be ready for that.”

The move to consider listing the airline is a “normal conversation” given that Etihad Airways' owner, Abu Dhabi holding company ADQ, has already floated companies within its portfolio of assets such as Pure Health, the UAE's largest healthcare group, and AD Ports Group, the operator of industrial cities and free zones in Abu Dhabi, Mr Neves said.

Asked about the timing of a possible deal, he said it was difficult to say because it had to be the “right window” of time.

“Every time you have uncertainty, it's not a good time to do it. It requires a lot of alignment of stars,” Mr Neves said.

“The shareholder has to be willing to do it, the company has to be ready, the market needs to be open and we have to have investors that are willing to invest. So, I'm not in a position today to tell you that all these conditions are aligned.”

Soaring high

Etihad Airways recorded its second consecutive annual profit in 2023, as it carried more passengers amid a continuing post-coronavirus travel boom.

Net profit jumped to Dh525 million ($143 million) last year, up from Dh92 million in 2022 (excluding a pandemic-related grant), Etihad Airways said on Wednesday.

Total revenue reached Dh20.3 billion, up 11 per cent annually, as passenger revenue grew while unit costs fell by 7 per cent.

The airline carried 14 million passengers last year, 40 per cent more than in 2022. As a result, passenger revenue soared to Dh16.6 million, up from Dh12.6 million a year ago.

Passenger load factor, a measure of how well an airline is filling available seats, rose to 86 per cent last year, from 82 per cent in 2022.

“We did well. We can do better on the profit margin; we have space to further expand our margins,” Mr Neves said.

The airline increased aircraft use and improved its route network planning, he said.

“First and foremost we're investing a lot of time in efficiency and cutting costs.”

For example, the airline added 30 per cent more capacity last year, two thirds of which entailed the use of parked aircraft or flying jets in the fleet for more hours.

Etihad Airways also streamlined its network connectivity by adding more flight frequencies to cities in Europe, the GCC and South-East Asia.

“We are saying 'No' to unprofitable markets … the network is getting stronger,” Mr Neves said.

“Profitability is improving because we are strengthening the network. As I provide more opportunity for my customers, I can capture more customers.”

Hiring spree on strong tailwinds

While high fuel prices, inflationary pressures and supply chain constraints present challenges to airlines globally, Etihad expects its annual profit in 2024 to exceed last year's results by keeping costs in check, boosting revenue and expanding its profit margins.

“We're confident that this can be a good year for us … we want to exceed every year a little bit. So, it's not about getting a big bump one year and not another year, it's about consistency in margin expansion,” Mr Neves said.

Etihad's investments at the end of last year in launching new routes, training newly hired pilots and adding more aircraft to the fleet will pay off in 2024, particularly in the first half of the year.

“We believe that are going to have a good year this year,” he said.

To drive its expansion, Etihad plans to hire 1,500 to 2,000 pilots, cabin crew, mechanics and engineers this year, according to Mr Neves.

“In the second half of the year, we're going to be hiring to prepare for 2025,” he said.

The airline hired 2,300 new employees last year, primarily pilots and cabin crew.

It has not struggled to find talent, despite a global crunch in aviation workers, because of the career opportunities for co-pilots to become pilots, the “better value proposition” of living in Abu Dhabi and the move to cast a wide recruitment net around the world, he said.

'Very bullish' on 2024

Mr Neves said he was “very bullish” about 2024 because the Middle East's economic expansion is fuelling the aviation industry's growth, despite conflicts.

While some markets, such as China, are still lagging behind, others such as Europe, India, the US and the GCC are “booming for us”, he said.

Strong travel demand, coupled with constrained supply due to delayed aircraft deliveries, is helping to keep the business strong, he said.

For this reason, he expects ticket prices to remain elevated across the industry.

Asked about the impact of high jet fuel prices, Mr Neves said the airline had hedged for 50 per cent of its fuel consumption for this year and was in a “comfortable” position.

'Etihad is back'

Etihad Airways will take delivery of 10 Airbus A321LRs, or long-range narrow-body jets, from 2025, which it will use to boost its operations in South-East Asia and Europe, Mr Neves said.

“They're going to come with an amazing new interior, with lie-flat Business Class seats and high-speed internet,” he said. “Etihad is back.”

The planes are a combination of operating leases and owned aircraft from the airline's order book. Currently, it operates the older Airbus A320 and A321 models.

“We're going to renew the entire narrow-body fleet over the next five years,” Mr Neves said, pointing to the newer model's fuel efficiencies and longer reach.

“The narrow-body strategy for us is extremely important. We believe we can be more profitable if we have a network that is well done. I cannot afford not to have relevance in GCC and Indian markets. That's 2.4 billion people within four hours. So, that's a market that's really important for us,” he said.

To be competitive and “relevant” in those markets, Etihad wants to boost flight frequencies on single-aisle planes rather than operate fewer flights using larger aircraft.

“So, instead of sending two A380s to Riyadh, one in the morning and one in the evening, I prefer to send four narrow-bodies with much more convenient schedules for business people and tourists,” he said.

“To do the long-haul, we can also deploy this aircraft. With a lower capital investment, I can also go double-daily to Geneva.”