News / Air cargo slowdown puts a dent in Etihad financial performance for 2016

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Etihad has announced a fairly significant loss for full-year 2016, of $1.87bn.

However, the carrier also reported impairments of $1.9bn, including a $1.06bn charge on aircraft as it phased out some types early.

It also had an $808m charge on some assets, as well as financial exposure to struggling equity partners, mainly Alitalia and airberlin.

Although it flew slightly greater volumes of cargo in 2016 – up 0.8% to 595,519 tonnes, freight revenue fell nearly 10% to $900m.

It said in a statement: “A slowdown in the cargo market put increased pressure on cargo revenues and yields.”

2016 was not a great year for air cargo, but there have been question marks over the carrier’s performance this year, as it is facing tough competition in the region. In April this year volumes at Abu Dhabi airport – in contrast to elsewhere in the world which mainly saw healthy growth – fell 14.4%.

However, David Kerr, senior vice president explained to The Loadstar earlier this month: “In April, adverse weather in Abu Dhabi severely impacted our operations. We proactively managed this by reducing capacity in and out of the hub to minimise delays in cargo processing during the busy Easter period.

“Our May volumes were back up to last year’s levels, which was expected given we are not growing capacity. Additionally, we are being very prudent in our fleet and network capacity management, which is perhaps less reflective of current volume trends, but still driven by underlying weakness in value.

“Yield improvement has allowed us to make more positive adjustments in recent weeks.”

Two other airlines reported results this week – both in the non-contiguous US. Hawaiian Airlines reported second-quarter revenues for cargo up 33% year-on-year, by $5.7m.

Chief commercial officer Peter Ingram told analysts on an earnings call: “Looking ahead, we expect to see continuing benefits from an environment of strong cargo demand, and later this year, we look to launch our neighbour island cargo freighters.”

The airline is to operate three ATR 72 freighters regionally.

Overall, the airline enjoyed a second-quarter net income of $80.4m, up $20.1m from the previous year.

Also in the US, Alaska Air, which bought Virgin America at the end of last year, enjoyed second-quarter cargo revenues up 19% to $32m. For the first half, operating revenues rose 10% to $56m. Total operating revenues for the airline group rose 36% in the first half, to $3,8bn resulting in a net income of $395m.