Etihad has been struggling financially for quite a while, and is undergoing a restructuring, as we see them try to increase revenue and cut costs.
The airline has lost nearly 5 billion USD in the past three years. This includes a loss of 1.28 billion USD in 2018, which is awful when you consider how many cost reduction initiatives the airline already undertook.
The airline is owned by the government of Abu Dhabi, and for many years it seemed like the government was willing to pour an unlimited amount of money into the airline, and viewed it as a vanity project.
But there’s no denying that over time that trend has changed, and increasingly Abu Dhabi is keeping the airline on a tighter leash. The results of this have been significant:
- Etihad has finally modified their failed investment strategy, and has cut off or greatly reduced support for airlines including airberlin, Alitalia, Air Serbia, and Air Seychelles
- The airline has significantly cut back their onboard product
- The airline has canceled many of their aircraft on order, as they had over 150 on order
Well, it looks like even with their more conservative approach, the airline will now have to look for money from sources other than the government.
Skift is reporting that Etihad is allegedly seeking a loan of about 600 million USD to help make initial payments for planes that they have on order. While an Etihad spokesperson hasn’t officially commented, Skift quotes “people familiar with the matter.”
If true, the airline has gone from getting virtually unlimited funding from the government, to being under closer scrutiny from the government, to now seeking outside financing.
They recently canceled 61 widebody orders, including Airbus A350s and Boeing 777-9s, though the airline still has a few of the planes on order, along with Boeing 787s.
So the fact that they’re seeking an outside loan for their already scaled back fleet plans is noteworthy. I’ll be curious to see how this plays out…
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