Struggling Etihad to Sell 38 Planes in a Fire Sale

Etihad Airways, the United Arab Emirates’ national airline, is undergoing yet another cost-saving measure — this time, it plans to sell 38 planes to two companies; some of the planes will be used on other airlines, and some will be leased back to Etihad. The deal is expected to cost about $1 billion.

In the latest cost-saving measure for Abu Dhabi’s struggling Etihad Airways, the airline has announced it’s selling 38 of its aircraft in a deal that should bring in about $1 billion. Twenty-two Airbus A330s and 16 Boeing 777-300ERs are on the chopping block.

The aircraft are being sold to two different companies: leasing firm Altavair AirFinance, and investment firm KKR. According to Fox Business, the Boeing 777-300ERs will get leased back to Etihad after the purchase goes through, and international clients will get the Airbus A330s.

“The deal offers us flexibility while ensuring we stand by our sustainability targets and maintain a fleet of the most fuel-efficient, technologically advanced aircraft,” the airline said in a statement, reported by Fox Business.

Etihad says that this sale is part of the third year of a transformation plan that was already in place. The A330s are no longer listed on the airline’s website as part of their fleet.

Has it Really Been That Bad for Etihad?

In short, yes. In the last four years alone, the airline has lost about $4.75 billion. In 2018 it lost $1.28 billion. Revenues went down from $6 billion in 2017 to $5.86 billion in 2018, and the airline flew about a million passengers fewer in 2018 than it did the year prior. So far, Etihad hasn’t released numbers for 2019—but based on past losses and this sale, it likely won’t show a gain when reports are finally released.

Why Has it Been So Bad?

It’s a couple of things, really. First, the airline started 2016 with a risky strategy: they were aggressively buying up major stakes in airlines around the world. The goal was to compete with Emirates and Qatar Airways, but it backfired. Instead of boosting Etihad’s revenue, it left the airline open to critical losses.

Etihad further suffered when Donald Trump took office in the United States and instituted travel bans affecting Muslim countries. Fewer passengers were flying as a result. And now, with the outbreak of coronavirus, the airline will likely suffer even more—the United Arab Emirates just stopped all flights to China, unless the flight is going to Beijing.