Etihad Airways to save Dh73m on fuel this year

Etihad Airways would be able to reduce its annual aviation fuel bill by Dh73 million ($20m) by the end of this year, owing to a series of cost-saving measures.

The airline said yesterday it has so far saved more than Dh44m.

The Abu Dhabi-based carrier, which launched a fuel hedging strategy in December 2006, saw it hedged at 70 per cent in 2007, 80 per cent in 2008 and 40 per cent next year. Now, with oil dropping to around $68 a barrel from its peak of $147 a few months ago, the airline says it still remains a wild card.

"Whilst the oil price has fallen relative to its summer peak, it still remains a sizeable cost for all airlines and, of course, it is not a controllable cost such as headcount or capital expenditure," James Hogan, Chief Executive of Etihad Airways, told Emirates Business. "The cost of oil, whatever the price, has a bearing on our business but the key point is that Etihad has to remain competitive in whichever market we operate. Pricing is an important element but as a full service carrier you need to look at all the aspects of our offering," he added.

The fuel bill fluctuates between 35 and 40 per cent of Etihad's operating cost, which is a huge leap on the 20 per cent it cost back in 2006, according to Hogan.

When asked how the airline was managing to raise finance for new aircraft and route expansions at a time when the credit market is drying up across the globe, Hogan said: "We have just had an Airbus A340-600 delivered and another one is set to join the fleet in December. We financed the debt for the two planes in the market and we were fortunate that the rates agreed were set before the September slump in the financial sector."

Clearly, the global financial turmoil has not deterred Etihad from revisiting its orderbook. "The orderbook is unchanged with the first aircraft of our deal announced at the Farnborough air show in July set to join the fleet in 2012," said Hogan.

He said similarly the airline is moving ahead with its route expansion starting off next month with flights from Abu Dhabi to both Moscow and Almaty in Kazakhstan. And March 2009 will see Etihad begin non-stop services to Melbourne and Lagos.

Etihad had said recently that going forward the carrier may be looking for possible equity partnerships in order to face the international financial crisis.

"In terms of possible equity partnerships my focus right now is on the core business and every day I look in microscopic detail for any blip in any market that might be feeling the squeeze," said Hogan. He said the airline's passenger and yield numbers look good for November, December and January. "But there is no complacency here. All markets are tough and we must remain competitive and keep a tight rein on controllable costs."

The airline said besides hedging strategy, fuel savings have been achieved through a variety of measures that include reducing weight on board, changing certain operating procedures and reducing cruise speed where appropriate.

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