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Business went through accelerated reality check but remains solid, says Etihad CEO

Business went through accelerated reality check but remains solid, says Etihad CEO

Etihad’s airline operations remain commercially viable and reports of cutting back on routes to otherwise well-known destinations shouldn’t be seen as signs of trouble, its chief, Peter Baumgartner, has said.

Baumgartner, CEO of Etihad Airways, part of Etihad Aviation Group, was speaking with CNBC yesterday when he said that such route cuts were “business as usual” and could be temporary.

“We do this in a way that it is very, very strategic. This is a constant evaluation that is not a one-time cut, and then you are done for the next ten years. This is a very agile business, in a very agile environment, and so that’s kind of business as usual,” he said.

Etihad Aviation Group posted its first loss in its history last year. The financial loss of $1.9 billion announced by the airline was attributed to one-time impairments on aircraft and investments in troubled European airlines including Alitalia and Airberlin.

However, the company’s core airline product “has always been operating very-, in a very, very solid way,” according to Baumgartner.

The most challenging times came in 2016 “when the oil price collapsed, and local regional markets contracted,” said Baumgartner, accelerating overcapacity issues particularly on competitive routes, bringing margins on those flights lower.

“That was kind of a perfect storm,” he said, “But even then, we operated with very solid load factors.”

Baumgartner acknowledged Etihad had gone through an “accelerated reality check” whose effects “are not just one-time, they are a cycle and do not go away that quickly,” but added that the airline’s response was “what you would expect a business after 10 years to do.”

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