Etihad Airways alerts doable IPO after 2023 income rebound

Abu Dhabi’s Etihad Airways is gearing up for a possible preliminary public providing after growing income in 2023 on the again of a 40% increase in passenger numbers.

Requested a couple of doable itemizing, Etihad Airways Group CEO Antonoaldo Neves advised CNBC on Tuesday, “I’m working to be ready, whenever it’s the time.”

Discuss of an IPO has been swirling after it was reported that ADQ, the Abu Dhabi-based funding firm that owns Etihad Airways, was in discussions with banks about going public as quickly as this 12 months.

“It’s not for me to confirm the shareholder decisions,” Neves mentioned, whereas additionally signaling efforts to arrange the airline. “It’s our obligation to be ready to IPO the company whenever the shareholder believes it is the right time… and this is good, even if you don’t do it.”

If it materializes, an IPO would allow Etihad to faucet capital markets to fund future development and enlargement plans. It will additionally make it the primary main Gulf provider to grow to be publicly traded, after years of speculation surrounding the listing of Dubai-based rival Emirates.

“We’re working very hard, so that our governance is top notch… so that profitability is at the level that the shareholder can decide to IPO or not to IPO,” Neves mentioned, including that “management are putting a lot of effort in place so that the company can be compared to any other company that is listed.”

Since becoming a member of the airline in 2022, Neves has restricted losses and invested in the customer experience after Etihad’s possession switch to ADQ in the course of the Covid-19 pandemic. The funding firm has already launched various high-profile IPOs lately, together with Abu Dhabi Ports and Pure Health.

ADQ declined to remark about doable itemizing plans.

Neves has beforehand led price chopping and fleet upgrades at Portuguese nationwide airline TAP and introduced Azul Airways public in New York in 2017. Etihad’s CFO Raffael Quintas additionally served as CFO of TAP and as company treasurer at Azul.

An inventory would mark a big step for Etihad and regional capital markets, however stays a hefty hurdle. Going public would topic the airline to stricter monetary reporting and disclosure necessities, extra compliance prices and market strain surrounding efficiency targets.

Whole income was $5.5 billion in 2023, up from $5 billion within the earlier 12 months. Internet revenue was simply $143 million. Whereas the determine is modest compared to industry giants, Neves mentioned he was optimistic about Etihad’s capacity to broaden margins and profitability, regardless of a challenging geopolitical backdrop and higher cost environment.

The airline expects income development of 25-30% this 12 months and is focusing on between $100 to $150 million in price cuts, however did not supply steerage on revenue estimates.

“I think we can do better,” Neves mentioned.

Neves additionally sought to reassure the flying public about Etihad’s Boeing fleet after a door blowout on a Boeing 737-Max 9 plane. He mentioned Etihad doesn’t fly the plane in query, however it’s a important Boeing 787 wide-body buyer

“We really trust the 787. It’s a safe plane. It’s an amazing machine. It’s one of the best machines flying today. The safety record is good. The operating standards are good. We’re very confident about the 787 program,” Neves mentioned.

He nonetheless expressed concern that the situation at Boeing may exacerbate delays and provide chain points that would impression the airline.

“You cannot delay planes… and that goes for Airbus as well,” Neves mentioned. “Delays after delays after delays – we live today in a world where an aircraft has become a scarce resource … The only way tickets are going to go down is if we have more aircraft, so that will deploy more capacity.”

He added, “The reality is there is untapped demand in the market.”