Etihad and Qatar Airways to be profitable next decade

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(CAPA): Etihad and Qatar Airways are expected to deliver profits next decade. Etihad and Qatar Airways are re-writing the textbook on profitless airline growth, with massive fleet and network expansion plans.

Their development plans are part of wider government-led economic development agendas in their respective bases of Abu Dhabi and Qatar. Both carriers are confident of becoming profitable early next decade, but their rivals are increasingly concerned about the competitive imbalances created by the level of government support they receive.

James Hogan, Etihad Airways’ new CEO, has unveiled a new business plan, at a time when the airline enters a “challenging stage”. According to Mr Hogan, consolidation of initial achievements is now vital, although further fleet growth is planned, with four A330s and three A340-600s arriving in coming months (11 new widebodies are joining the fleet throughout 2007). According to new CEO, James Hogan, the business plan “covers our network, fleet expansion strategy and the Etihad brand. It also includes product, service portfolio and focuses on the creation of enabling infrastructure vital for a successful and growing business”.

Etihad has quickly grown to a fleet of 22 widebody aircraft operating to 37 destinations and its Summer schedule will expand by 18% year-on-year, with 40 new weekly services from Abu Dhabi. But losses will continue to flow over the next three years due to the carrier’s break-neck pace of expansion. Hogan targets break even in 2010, and a move to profitability thereafter.

Meanwhile, Qatar Airways CEO, Akbar Al Baker, recently said the Doha-based airline would be a "cash cow" from 2012, earning “tonnes” of profits and hinted at a possible listing at that time. The carrier is preparing for another blockbuster order mid-year for up to 80 A350 XWBs and B777s, as part of plans to more than double in size by 2015 to 110 aircraft.

Qatar Airways currently operates 52 aircraft and is also preparing a massive expansion of its Summer schedule (effective 25-Mar-07), with new services to Ho Chi Minh City, Denpasar, Chennai, Geneva, New York, Stockholm (from Nov-07) and Washington DC, taking its destination tally to 79. The airline is also increasing capacity to over a dozen existing destination, and this week received rights to launch services to Australia.

Like Emirates before it, the world’s airports will be seeing a lot more of Etihad and Qatar Airways in the months to come, much to the chagrin of competitor airlines.

Date posted: 26-Mar-07.

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