Cargo losses at Etihad more evidence of Gulf region’s cargo downturn

What Etihad Airways called a “slight improvement” in freight carried during fiscal year 2016 failed to offset increased pressures on cargo revenues and yields, prompting a 10 percent decline in freight revenues to US$900 million. Cargo volumes for Etihad’s FY 2016 rose just 0.8 percent to 595,916 tonnes.

The news from the Abu Dhabi-based carrier comes at a time when a confluence of regional economic conditions and increased competition from carriers such as AirBridgeCargo and Turkish Cargo – both of which continue to post gangbuster gains – seems to have closed the book on the formerly steady reports of double-digit cargo gains by regional carriers. None of the three major Gulf carriers publish monthly cargo stats, but the latest numbers from Etihad fit a picture of regional cooling off – with the exception of Doha, where a Saudi-led blockade driving up cargo volumes.

Warning shippers of potential congestion, Panalpina noted that, “the capacity growth fueled by the Middle Eastern carriers Emirates, Etihad, and Qatar Airways has stagnated in recent months.”

Etihad is responding with a “Right Size & Shape” program that it says generated total overhead savings of 4 percent through “headcount reductions and other measures… even as capacity and total passenger numbers increased.”

Factoring in passenger operations, Etihad still registered a significant loss over 2016, totaling $1.87 billion, compared to the previous year. The primary culprit was impairments of $1.9 billion, including a $1.06 billion charge on aircraft that were phased out early. Etihad also had an $808 million charge on “certain assets and financial exposures to equity partners,” mainly related to subsidiary carriers Alitalia and airberlin.

At the Abu Dhabi International Airport, the latest cargo numbers posted were for May, during which time cargo volumes fell 4.7 percent, year-over-year, to 62,560 tonnes. For the first five months, cargo volumes were down 4.5 percent, y-o-y, to 306,282 tonnes.

Commenting on the remainder of the year, David Kerr, senior vice president of Etihad Cargo, told Air Cargo World that, “We see the strength from the first half of 2017 continuing and, indeed, peaking in the second half of the year, based on the volume of inquiries we are receiving.” However, Kerr doubted that volumes would be exceptional in the end, as capacity is largely contracted in advance.

Kerr’s circumspect outlook contrasts with that of his counterpart to the north at Turkish Cargo, Turhan Ozen, who told Air Cargo World that he expected “significant levels of growth,” and was growing the carrier’s freighter fleet accordingly.

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