Etihad Airways boosted by partnerships

Etihad Airways, the fast-growing Gulf airline, reported a $42m net profit in 2012, a 200 per cent increase from the year earlier, as passenger numbers rose and the company’s carrier partnerships boosted revenue.

James Hogan, chief executive, confirmed Etihad was in discussions with Jet Airways about the possibility of the Abu Dhabi-based airline investing in the Indian carrier.

State-controlled Etihad is conducting due diligence on Jet and Mr Hogan said: “We are very keen to continue to build our presence in India and this is one way of doing it.”

As well as considering a minority stake in Jet, Etihad is evaluating the case for establishing a code share agreement with the Indian airline, under which its passengers would then fly on the Abu Dhabi carrier’s aircraft. No final decisions have been taken.

Etihad, established in 2003, is seeking to fill its 70 aircraft partly through investments in other airlines and code share agreements.

In December 2011, Etihad bought a 29 per cent stake in Air Berlin, Germany’s second-largest airline, and has also acquired other minority stakes – including 9 per cent of Virgin Australia, 40 per cent of Air Seychelles and 3 per cent of Aer Lingus.

The company’s equity-investment carrier partnerships generated more than $600m of its $4.8bn of revenue in 2012 – more than 13 per cent of its sales.

Mr Hogan said a “considerable slug” of the $600m came from the 41 code share agreements that Etihad has with other airlines.

One of the most important code share deals is with Air France-KLM, which was announced in October.

The deal underlined how relations between some of Europe’s flag carriers and the younger Gulf airlines are thawing, following a period of intense competition.

As Etihad is not a public company it does not release all of its financial data, but the airline’s results are audited by KPMG, the accounting firm.

The airline’s $4.8bn of revenue in 2012 represented a 17 per cent increase on 2011, and earnings before interest and tax rose 24 per cent to $170m. Passenger numbers rose 23 per cent to 10.3m.

Etihad is one of the most important customers of Airbus and Boeing, the passenger jet makers.

Etihad has 41 Boeing 787s on order, and Mr Hogan said he did not expect the first aircraft, due for delivery next year, to be delayed by regulators this month ordering a global grounding of the aircraft because of safety concerns.

Mr Hogan described the 787 as a “great aircraft”. Regulators are investigating battery failures on two 787s operated by Japanese airlines that forced one to make an emergency landing.