Etihad Airways gets 'A' rating | Fin24
 
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Etihad Airways gets 'A' rating

Jun 03 2015 15:50

Johannesburg - Etihad Airways, the national carrier of the United Arab Emirates, has welcomed the announcement on Wednesday that it has been assigned the rating of ‘A’ with a stable outlook, by international credit ratings agency Fitch Ratings.

Fitch Ratings issued the long-term Issuer Default Rating (IDR) following a detailed independent analysis of Etihad Airways’ business, commercial performance and equity alliance strategy.  

“We have a clear mandate from our shareholder to deliver long-term, sustainable profitability. Our organic growth, boosted by our minority equity investment model, is increasingly being recognised as a highly effective strategy to deliver that return," said James Hogan, president and CEO of Etihad Airways.

“We have already raised more than $11bn to support our growth, from more than 80 financial institutions around the world.  We raise that finance on commercial terms, with no sovereign guarantees or letters of comfort."

He said the latest rating will help international investors understand Etihad's plans to expand its operations and raise additional external financing.

“The A rating also supports Etihad Airways’ strategy of fast-paced organic growth and establishing minority equity investments in key strategic partners around the world," said Hogan.

According to Fitch Ratings, one of the key competitive advantages of Etihad compared with European and to some extent US peers is the geographic location of its hub in proximity to the fast-growing travel markets of Asia, the Middle East and Africa.

Etihad’s more developed route network in these regions gives it a competitive edge over European carriers that are also focusing on connecting the Asian, the Middle Eastern and African passenger traffic to Europe and the US.

The ratings agency said Etihad has three competitive advantages over its Gulf peers, namely US pre-clearance at its Abu Dhabi hub, shorter connecting times and greater domestic access to key markets such as Europe and India, through its airline partnerships.

Fitch believes Etihad has achieved critical network size should enable the company to focus on profitability management capitalising on its scale and brand recognition, as well as on incremental revenue and synergies from its operations with equity partners.

The company on its own generated 28% of 2014 passenger revenue from premium class and business travellers accounted for 16% of total passengers carried in 2014 and quality focused leisure travellers for 26% of passenger traffic, all of which provide a solid base for enhanced profitability focus.

The rating also highlights Etihad Airways’ focus on cost management and its significant investments which have helped it to reach a more mature stage as a business.

Etihad Airways recently reported revenues of $7.6bn and net profits of $73m for 2014, marking its fourth consecutive year of profitability.

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