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Struggling Etihad to Sell 38 Planes in a Fire Sale

Struggling Etihad to Sell 38 Planes in a Fire Sale
Jennifer Billock

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.

View Comments (10)

10 Comments

  1. edgewood49

    February 20, 2020 at 6:46 am

    There is nothing new about a company doing a “sale/leaseback” it happens all the time without being called a “Fire Sale” as you purport. As a business owner ( construction) with a large inventory of heavy equipment we often lease rather than buy.

    As for Etihad yes they like many of their brethren in the airline world made some bad decisions none any better or worst than say United or American here in the US theirs is simply on larger scale and certainly more visible and widely criticized by the likes of Delta and American Airlines who’s product pre ME3 expansion was miserable we owe the ME3 thanks for their innovated product which shamed our US carriers into actually spending some money on their hard and soft product. I have avoided US metal for over ten years internationally only flying when there is no other option.

  2. GeauxTigersGeaux

    February 20, 2020 at 9:33 am

    “Etihad further suffered when Donald Trump took office in the United States and instituted travel bans affecting Muslim countries.”

    How much did Etihad suffer due to that, exactly? What percentage of revenue was generated from folks with passports from these countries? If you can’t find that in their financial filings, then you don’t actually know that statement to be true. Emirates, Qatar, Lufthansa, IAG, Turkish and many other airlines also carry passengers with passports from those countries to the US, so any airline with a lot of routes into Middle East/Africa should have experienced similar financial issues.

    By the way, on the original travel ban list only has one Islamic republic on it, Iran. The world’s largest population of Muslims is Indonesia (not an Islamic Republic), which wasn’t on the travel ban list, nor was the Kingdom of Saudi Arabia, Pakistan, etc.

    An accurate, non partisan, non inflammatory way to restate would be to say, “The travel ban was imposed by Trump’s DHS on six countries for failing to meet increased security standards for travelers, including six majority Muslim countries.”

    Example, 2017: “According to BKA (German Federal Police) information, there are 11,100 Syrian blank passports… in the hands of the IS [Islamic State, also known as ISIS/ISIL],” the documents from the interior ministry reportedly state.

    In total, 18,002 blank Syrian passports were stolen from the Syrian government, Bild am Sonntag reported.”

    But hey, it’s only because of unwarranted discrimination.

  3. Jaysonb22

    February 20, 2020 at 2:19 pm

    “Less passengers were flying as a result.”

    Fewer

  4. edgewood49

    February 20, 2020 at 3:07 pm

    Yes less passengers we have just begun to see the fallout from the virus outbreak one Chinese carrier just went down more to come. Your going to see a rash of business loans defaulting in China as well. It’s going to be an interesting second quarter

  5. Sydneyberlin

    February 20, 2020 at 6:36 pm

    I still hold a grudge against Etihad for running my beloved Air Berlin into the ground. They’re now getting a taste of their own poisoned medicine and I am enjoying every moment of it.

  6. HWGeeks

    February 20, 2020 at 7:14 pm

    Does Flyertalk have an editorial staff? If they do why was this article approved?

  7. OZFLYER86

    February 20, 2020 at 8:11 pm

    There are so many A330s parked around the world the lease prices are incredibly low, but who wants them. Most airlines are cutting back due to Corona & it seems Corona has a long way to play out. Maybe 6 months or more. Many more airlines will close down in 2020 than in 2019.

  8. dhacker

    February 21, 2020 at 12:06 pm

    Sorry Tiger, but there is zero bias in the statement ““Etihad further suffered when Donald Trump took office in the United States and instituted travel bans affecting Muslim countries”.

  9. arjaok

    February 22, 2020 at 10:09 pm

    I love how we can just follow the trail of:

    Geauxtigers–>from south
    Awkwardly pretends to have serious concerns about Syrian passports–>Yep, he hates the browns.
    Somehow believing that the only way Trump could have influenced a thing is if the person has EXACT data around the stuff this guy demanded for no real reason–>How dare you say something bad about my orangelord??

    Yet, since I’m from the West Coast, calling this obvious ignorant racism, ignorant racism probably means im an elitist virtue signaler who’s trying to impose my morals on you or something. Am i right? Wheeeeeeeeee. Never stop cowarding!

  10. AJNEDC

    February 26, 2020 at 2:55 pm

    Ohhhh the Residence didn’t aid in turning a profit?

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