Abu Dhabi’s Etihad Airways is not hiring non-operational staff until “at least” the end of the year after introducing an partial employment freeze in the first quarter, Etihad Aviation Group president and chief executive James Hogan said on Tuesday.
Hogan said Etihad will not be firing any of its 27,000 staff and the freeze will only affect its non-operational employees, who also will not be replaced if they resign. The airline will continue hiring pilots, cabin crew and engineers, he said.
The employment freeze was introduced “at the end of the first quarter” in a move to curb the impact of yield pressure (profit margins on airfares) on the airline’s bottom-line, Hogan said at a media briefing in Dublin.
Airlines around the world have complained this year that currency fluctuations, economic uncertainty, including the Brexit vote in the United Kingdom, and overcapacity in the market are putting pressure on yields.
“Worldwide you’re seeing great deals or heavy discounting depending how you look at it,” said Hogan, who spoke to reporters ahead of the International Air Transport Association (IATA) annual meet in the Irish capital this week.
“The biggest challenge for all airlines this year is capacity, there is a lot of capacity in the market,” Hogan said.
A series of terror attacks in Europe, Turkey and North Africa that forced many travellers to rethink their holiday plans has also put pressure on yields.
But Etihad has recently seen bookings start “accelerating,” Hogan said, including an increase in demand on popular routes from East Asia to Europe that had dropped off following the Brussels terror attacks in March and the Paris terror attacks in November.
“India has been strong for us South Asia has been strong for us,” he said, although he added that the June Brexit vote in the United Kingdom is making people “nervous.”
“People just don’t travel, people sit at home... people get nervous,” he said.
The collapse in the oil price has also had an impact on the global corporate travel market as companies looking to cut their spending.
The Abu Dhabi market “has obviously been impacted due to corporations tightening their belt,” Hogan said.
Etihad is planning to carry 19 million passengers this year, an increase on the 17.6 million in carried in 2015 when it made $103 million (Dh378.31 million). Hogan said the airline will meet its passenger and profit targets this year “but the focus on cost to offset the challenge of yield will be considerable.” He declined to say what the profit target is.
There are growth opportunities in China and Africa and Etihad has asked for permission to fly to secondary cities in China, Hogan said. He declined to name the cities.
“They’re big markets,” Hogan said of Africa and China. But a “very difficult... regulatory process” has made it hard for the airline to expand in Africa.
He also said lobbying efforts by the United States’ biggest carriers last year to stop Etihad and other Gulf carriers from flying to the US has had no impact on the airline.
“We have no new routes planned in America but it hasn’t stopped our development,” he said.
Hogan declined to comment on reports Tuesday that China’s HNA Aviation will buy a stake in Virgin Australia that will dilute Etihad’s stake in the Australian airline from 25.1 per cent to 21.8 per cent.
The reporter travelled to Dublin courtesy of Etihad and IATA.
By Alexander Cornwell
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