Abu Dhabi’s Etihad reports $870m loss in 2019

In February, Etihad announced it would sell 38 aircraft to an investment firm and a leasing company in a deal valued at $1 billion. (AFP)
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Updated 06 March 2020

Abu Dhabi’s Etihad reports $870m loss in 2019

DUBAI: Abu Dhabi’s long-troubled national carrier Etihad has reported losses of $870 million in 2019 after losing billions in recent years, calling the result “encouraging.”

Since 2016, Etihad has lost a total of $5.62 billion as its strategy of aggressively buying stakes in airlines from Europe to Australia exposed the company to major losses.

The company has since started to claw its way out of financial trouble. 

In February, Etihad announced it would sell 38 aircraft to an investment firm and a leasing company in a deal valued at $1 billion. Etihad said that revenue would be reflected in its 2020 results.

“There’s still some way to go but progress made in 2019, and cumulatively since 2017, has instilled in us a renewed vigour and determination to push ahead and implement the changes needed to continue this positive trajectory,” Etihad CEO Tony Douglas said in a statement.

By comparison, Etihad lost $1.28 billion in 2018. Etihad reported losses of $1.52 billion for 2017 and $1.95 billion in 2016.

Etihad reported revenues of $5.6 billion, compared to $5.9 billion in 2018. It carried 17.5 million passengers last year, down from 17.8 million in 2018. It attributed the lower revenues to cutting back on routes as part of its restructuring plans.

Etihad also has restructured planned aircraft purchases from Airbus and Boeing. It said its fleet now has 101 aircraft in it, down from 106 the year before.

Abu Dhabi’s rulers launched Etihad in 2003, competing with the established Dubai government-owned carrier Emirates that flies out of Dubai International Airport only 115 km away. In 2018, Etihad began loaning pilots to Emirates under a new program. Both Emirates and Etihad compete in the long-haul carrier market, using their nation’s location between East and West to their advantage.

Both airlines continued to fly to Beijing amid the ongoing outbreak of the new coronavirus, even as other Western airlines have cut flights.

Etihad has asked cabin crew to consider bringing forward paid leave from later this year to April, due to the shrinking demand.

“Global restrictions on travel and retiming of events have caused many passengers to change their travel arrangements, and the airline is among many realigning resources to accommodate these changes,” it said in a statement.

The hard times have forced Etihad to sharply reduce its orders from Airbus and Boeing, canceling dozens of aircraft in the process.


Turkey hikes interest rate for first time since 2018

Updated 14 min 17 sec ago

Turkey hikes interest rate for first time since 2018

  • The bank said the one-week repo rate would go from 8.25 percent to 10.25 percent
  • The coronavirus pandemic has forced nations worldwide to cut rates to revive their stalled economies

ANKARA: Turkey’s central bank raised Thursday its main interest rate for the first time since September 2018, boosting it by two percentage points to haul the lira up from historic lows.
The bank said the one-week repo rate would go from 8.25 percent to 10.25 percent.
The lira gained around one percent in value against the US dollar within minutes of the announcement, after touching a record low of 7.71 earlier in the day.
“Massive surprise, and positive,” said Timothy Ash, an analyst at BlueBay Asset Management.
The coronavirus pandemic has forced nations worldwide to cut rates to revive their stalled economies.
But Turkey has been burning through its hard currency reserves to support the lira, which has lost nearly 22 percent of its value against the dollar this year and is one of the world’s worst performing emerging market currencies.
The Moody’s ratings agency estimated on Monday that Turkey’s hard currency reserves were now at a 20-year low.
A central bank statement said it “decided to increase the policy rate by 200 basis points to restore the disinflation process and support price stability.”
Inflation edged up to 11.77 percent in August from 11.76 percent in July but it has remained stubbornly in the double digits in the past few years.
This means that Turkey is running a negative real interest rate, where bank deposits and bonds lose value over time, forcing investors out of the market and Turkish nationals to convert their liras into dollars or euros.
The bank last increased its main rate in September 2018 from 17.75 percent to 24 percent owing to a currency crisis caused by tense relations with the United States.
But President Recep Tayyip Erdogan opposes high rates, once describing them as “the mother and father of all evil,” and called for them to be lowered to stimulate growth.
Erdogan last year sacked the bank’s governor and appointed Murat Uysal, under whose direction the rate has been cut nine times.
Ash said the rate decision “suggests the (bank) listened to the market and decided they had to move to avoid a disorderly devaluation and potential balance of payments crisis.”
“They are not out of the woods yet, but they have given themselves a fighting chance.”