Etihad Airways are optimistic that travellers will return to flying this summer, according to CEO Tony Douglas. New travel corridors, the increasing rate of global vaccinations, and improvements to COVID testing technology are reasons for growing travel industry optimism, said Douglas in an interview with The National.
The Abu Dhabi based airline recently revealed significant losses in 2020 from a lack of travel demand caused by the COVID-19 pandemic.
However, Etihad is hoping to begin their financial recovery this summer with Douglas stating, “As we get into the summer months, unless vaccine programmes slow down or there is a flaw in the strategy, things will start to tip back into the right direction in a whole bunch of countries”.
Etihad’s road to recovery
Etihad is aiming to offset the losses caused by the COVID pandemic by 2023. According to the airline, the pandemic has enabled the business to restructure to fare better in the incoming years. Etihad claims that operations are now ‘leaner and more agile, due to the acceleration of transformation plans.
And they expect that summer 2021 will see the first steps on the road to recovery for the travel industry. Douglas said that Etihad customers would “adapt and adopt to the new norm” created by vaccinations, health-passports and PCR. According to the CEO, monitoring costs at “an obsessive” level will be vital for recouping costs.
Douglas also speculated that the vaccination rate increase in the UAE, Europe, Asia, Israel would open travel corridors and increase flying, stating, “My expectation is that we’ll start to see the list of countries that are able to have travel corridors will get longer and longer, which will be heavily impacted by the way in which vaccines give that assurance”.
However, despite this expected pick-up, Douglas admitted that Etihad would likely lay-off more employees. This follows a 33% reduction in workforce size in 2020 compared with 2019, with the airline making redundancies across three business areas. The company also reduced salaries for many of its staff.
The Etihad CEO insisted that fewer employees will lose their job this time around but did not provide a specific number. This may also be dependent on the success of the summer transformation plans.
A global downturn in 2020
Earlier this month, Etihad released their financial results for 2020, demonstrating a sharp decrease in passenger aircraft revenue from 2019. The airline revealed a 74% drop in passenger revenues, recording a drop from 4.8 billion US dollars in 2019 to 1.2 billion US dollars in 2020.
This was due to the 76% fall in passenger numbers on Etihad flights, with 80% of all passengers flown in 2020 coming within the first three months – before the pandemic took hold worldwide.
Douglas was keen to stress that this had the potential to be worse and “could have easily doubled” without the early implementation of the airline’s 5-year plan. The airline also revealed a reduction of 64% of passenger capacity with a 52.8% decline in seat load factor from the previous year.
But the airline’s dip in passenger output was softened by their cargo operation, which fared significantly better in 2020. Etihad cargo attained a 66% revenue increase rising to 1.2 billion US dollars. This is attributable to the massive global demand for supplies relating to the COVID pandemic, including PPE.
Light on the horizon?
The significant upheaval of the travel industry was a surprise to airlines, which now must adapt to a market that will look entirely different from 2019. Many have highlighted a renewed focus on sustainability, with sustainable flying also being a central feature of Etihad’s transformation plans.
Douglas stated that a shift to more sustainable practices could be the ‘silver lining’ of the crisis and that this renewed pledge will help the airline grow in future. However, the airline is also expanding in other areas, receiving two Boeing 787 Dreamliners in 2020 – a move they see as vital for developing the ‘backbone’ of their global fleet.
Words by Jonathan Ritchie