Etihad’s fleet simplification

By the Leeham News Team

Apr. 27, 2021, © Leeham News: Etihad Airways’ CEO Tony Douglas announced that the carrier would be grounding its A380 fleet indefinitely and retire its 19 777-300ERs by the end of 2021.

The Abu Dhabi carrier has become the latest to terminate A380 operations. Etihad took 10 Superjumbos over 2014-2017, which featured “The Residence” seat. After the aggressive and luxury expansion of the early 2010s, transformation towards increasing efficiency is the order of the day.

The carrier intends to retire its 777-300ER a little more than a year after announcing a sale and leaseback transaction with Altavair and KKR. LNA does not know whether Etihad could terminate the leases early and whether there were penalties associated with the move.

The move will add another 19 777-300ERs on the market looking for a new home. There are currently large numbers of 777-300ERs coming off lease.

Still an oversized order book

Below is how Etihad’s in-operation fleet looks after accounting for the retirement announcements:

The Abu Dhabi carrier would still have more aircraft on order than in service.

The Dreamliner and the A350-1000 will form the backbones of the carrier’s long-haul fleet. Etihad will finally activate its five A350-1000s after two years of storage. There were rumors the airline might never operate them.

As of earlier this year, the carrier hadn’t finalized the A350-1000 delivery timelines with Airbus. Etihad should receive its first A321neo in 2022.

Two major question marks

Tony Douglas remained coy on the 777X prospects. After committing to A350-1000 operations, LNA is even more skeptical Etihad will operate the 777X. Adding such aircraft would be in plain contradiction with the carrier’s transformation plan, including a reduction in aircraft families. LNA believes the airline is too small to justify operating three twin-aisle passenger aircraft families.

The 777X order could be a bargaining chip for more 787 orders or a new aircraft, should Boeing decide to launch it. Etihad is doing an eco-demonstrator program with Boeing using one of its Dreamliner.

Etihad did not disclose plans for its 777F fleet. Since it committed to the A350-1000, the A350F could be a prime candidate to replace the freighter fleet should Airbus launch the type. The A350F would allow Etihad to stick with two aircraft families and keep a dedicated freighter fleet.

51 Comments on “Etihad’s fleet simplification

  1. Compared to other retirements Etihad’s A380s are relatively new, it will be interesting to see what happens with them.

    Perhaps EK or BA will be tempted? These seem to me the two airlines most affected by slot constraints, and therefore having genuine requirement for VLA.

    IIRC Willie Walsh said he didn’t discount the possibility of BA acquiring second hand A380, at the right price. Etihad’s GP7k engines might put them off though.

    • @Sonik and @Toulouse
      Seeing as Emirates now has to wait even longer for its 777Xs (if they come at all), and in view of the fact that the A380 has always been a huge money-spinner and passenger hit for Emirates, it mightn’t be a bad idea at all for Emirates to snap up a lot of these cheap, young second-hand A380s that are hitting the market. Not just from Etihad, but also other carriers.
      Emirates has already indicated that it will continue to operate its existing fleet of A380s far into the future.

      • A380: I get a laugh on this one, each time its the same thing.

        But Malaysia has had their A380s for sale for a long time. Latter production, all the mods, highly desirable build (if there is any desire)

        gone no where. Now Air France and Lufthansa are dumping their into the already hot A380 markets, so I am sure someone will snap those up.

        Oh yes, 4 engine are so dated. Hi Fly grounded theirs, lot of PR, no one wanted to pay to use it.

        If the 777X is swirling the drain, the A380 is already gone down it.

        • Except that Emirates already operates the A380, and generates 85% of its profit with it.
          It doesn’t operate the 777X, which will probably never have an EIS at any airline.

          • The point is that there is a huge excess of A380 on the market and no buyers.

            Emirates could have kept the line going by itself but chose not to do so.

            I am not making any predictions on the 777X. I think its an unknown. There seems to be a market there but its not the same as the 777-300ER.

            Equally the A350-1000 even before the pandemic was not selling there that well (and you do not hear a peep about the A350-2000 anymore do you?)

            BA is the only one not dumping the A380. Qantas scaled back.

            BA just has to wait to get more (if they still want them post Covd which is not post by any means)

            You simply can’t give an A380 away now.

  2. Etihad’s ten A380 are stored since March 2021.

    What is going to happen to those aircraft?

    • CORRECTION

      Etihad’s ten A380 are stored since March 2020.

      The fleet has been inactive since more than one year.

  3. It’s still odd for the UAE to have this second carrier when there’s a much bigger carrier (Emirates) just up the road in Dubai (and another huge carrier (Qatar) just a stone’s throw away). Etihad used to be able to distinguish itself by pioneering ultra-luxe air travel (The Residence, but also its other first class suites were game changers), but those days are gone. I suppose Tim Clark is eyeing those 20 A350-1000s with envy, and regretting that he ditched his own order due to unjustified fears over hot airport performance of the Trent XWB 97.

      • @ Toulouse

        Who knows?
        If Emirates acquired Etihad, it would immediately get a whole bunch of young A350s and 787s at a relatively low price, would eliminate a competitor, and would create a larger user for an expanded future DWC airport. It could then dump all 777X orders — which will probably never amount to anything anyway — and have immediate flexibility to respond to increased demand post-CoViD.

    • @Bryce

      Emirates has 50 -900’s on order. I’m guessing if he really wanted to, he could flip some of those into -1000’s.

      • @ Frank
        Of course he could — Airbus would be delighted to sell more -1000s.
        My general point is that the 50 A350s that he has on order + the 20 A350s from Etihad + the various 787s at Etihad would act as an immediate substitute for his never-to-be-delivered (and overly expensive/heavy) 777Xs.

    • It’s still odd for the UAE to have this second carrier when there’s a much bigger carrier (Emirates) just up the road in Dubai (and another huge carrier (Qatar) just a stone’s throw away).

      During Dubai’s 2007 – early teens financial crisis, Dubai requested bailout funds from its much wealthier sibling, Abu Dhabi. Initially, Abu Dhabi postured to have Emirates Airline for itself as a condition of the bailout. This would have seen UAE’s AUH hub gain great prominence or traffic could have been largely consolidated at AUH.

      Of course, Abu Dhabi didn’t insist and settled for a consolation prize: Burj Dubai would be renamed Burj Khalifa (after the president and monarch of Abu Dhabi).

      How fortunes have changed!

  4. The simple answer is the whole airline wont likely survive, it cant make a rational decision on fleet or anything . Not mentioned is the buckets of money blown in stakes in failed carriers like Air Berlin , the largest German corporate collapse. The administrator of the wreckage is suing Etihad for 2 bill euros. I wont even start on Alitalia and Jet Airways.

    • Nothing a couple of dollars per barrel of oil price increase, won’t fix.

      • @ Frank
        Also possible to allow Etihad to go bankrupt (thus negating its liabilities), with a subsequent acquisition of its assets (and selected liabilities) by Emirates.

        • What does Emirates want with a second hub thats 80min by car away?
          They have two airports in Dubai itself, Dubai World and Dubai International

          • The idea/planning is that DXB be closed when DWC opens.

            HongKong, Istanbul and Berlin did similar…so I suppose you’ll say that Dubai is just doing “shanzhai” 😄

          • @DoU

            Can you operate two major hubs close with each other?? Won’t the traffic interfere?

          • @ Pedro
            Acquiring Etihad doesn’t necessarily mean that you have to continue using Abu Dhabi as a hub. Abu Dhabi is a sleepy backwater compared to Dubai: its airport can appropriately revert to being a terminal rather than a hub.

            Conveniently, DWC is so far south of downtown Dubai that it’s almost half way between Dubai and Abu Dhabi.

  5. The sustainability of the growth of the ME3 was always questionable, some consolidation was inevitable IMO.

    The geography is favourable to a mega-hub for popular Europe-Asia routes but it also has several downsides, such as extreme hot conditions, relatively small local population to support O&D and difficulty/cost of staffing with expats.

    I wonder if India could become a significant lower cost competitor here, they have a similar geographic position but have a huge, well educated, ambitious population and growing middle class – this supporting both staffing and O&D. Indian short haul LCC has grown like topsy and it’s still tiny relative to elsewhere.

    It’s been held back mainly by bureaucracy and lack of infrastructure, but both are rapidly being addressed. One to watch I think.

    • I doubt that the bureaucracy is being addressed. That will continue to curb the Indian market. Bureaucracies grow, they hardly ever get smaller. At least I’ve never seen any example.

      • A rarity for sure, but the entire US Civil Aeronautics Board got the boot with airline deregulation in the ’80s resulting in monumental growth for the industry. India could use something like this.

      • There have already been substantial changes, previously Indian regulations were designed to protect the flag carrier, government now has more clear intent to promote competition.

        India is not like China (or indeed UAE) it’s a democracy. As new entrants grow in scale so too does their public & political influence, accelerating the pace of change. Go Air and Indigo are some of the fastest growing airlines in the world.

        We have seen this deregulation process play out already in US/EU once this begins it does not stop.

        • Yet airlines keep struggling and going under in India, despite it being a huge booming market. Air India is done, Kingfisher didn’t make it, nor was Jet Airways able to benefit from this big market.
          I’m not too optimistic about the Indian market.

          • I agree India is not in any way an easy market. Consumers are very cost sensitive, margins are tight and competition is intense. So airline failures and consolidation are inevitable.

            But these same dynamics also force efficiency, those who do survive, must have a very lean, highly optimised, low-cost operation.

            So they will be very well placed to give the ME3 a run for their money IMO, should they choose to give low cost long haul a go.

          • Air India is a jobs program which uses taxpayer money to undercut rivals. It kills profit for the entire industry. The government has to let it go before the industry can recover. They have made some weak attempts in that direction, but no one has the nerve to cut ties and watch it fail.

  6. Etihad should cancel the 777x. It is true that Emirates has been stubborn about the A350-1000. The fact is that the A350-1000 beats the 777-9 in range by a significant margin, comfort, efficiency, and price. The A350-1000 now has a range of 8700nm .
    Sooner or later Emirates will fold. That is too good of a plane to passs on and there is no place fir the 7778 anymore. It just can’t complete anymore.

    • Indeed!
      Boeing probably wants the 777X to die a slow death by cumulative cancellations rather than a quick death by formal program termination. The advantage of the former is that it produces less of a shock decrease in stock price. Judging by Tim Clark’s increasing exasperation (he takes to the press on a weekly basis to vent it), it won’t be long before he pulls the plug.

      On the subject of the A350-1000:
      FG: “Airbus formally lists highest-weight A350-1000 at 319t”

      https://www.flightglobal.com/air-transport/airbus-formally-lists-highest-weight-a350-1000-at-319t/143472.article

      • Boeing sold nearly a 1000 of 777-300ER types including siblings in last 20 years . That market isnt going away and they will want to maintain that market share.
        The order book for the 777-300ER wasnt that great when it went into service, maybe around 200. The 777X will still be selling in 20 years time, as its sold to business customers who can make up to $200 mill in revenue from each plane for each year they fly it on the longer haul routes. Its expensive to buy and operate but the revenue is there.
        Since the Coliseum its always been about ‘bums on seats’..always

        • Sure — just like the orders poured in for the 747-8, despite the huge market share that its predecessors had enjoyed.

          Most airlines can’t fill a 777-300 flight. They can reduce frequency in an effort to increase load factor, but they then lose market share to competitors with higher frequency. Airlines now prefer smaller, more efficient planes: they have no need for heavy, expensive giants.

          The age of the VLA is over…didn’t you get the memo? 😉

          • That is really the question where the heart of the market is.

            The A350-1000 has moved into the 777-300 slot. Its not been a out of the park seller either. Ok, but as a significantly modified derivative that is not good (its not just a stretch)

            note: The ones that hoop and holler about derivatives should take note that the A350-1000 is one.

            The 777-9 or -10 is a bigger plane with more pax. As such its lost a key customer in the Cathay Pacific is going under as soon as China can bury it (anything Honk Kong is toxic to Chinese Communists)

            That leaves BA, Lufthansa, Singapore, ME3. JA and NCA as the big players (or former big players, have to see on ME3).

            US Airlines not interested at all.

            The market move is the high end of the A350-900 and the low end the 787.

            The A350-1000 is the obvious inheritor of the 777-300 space but its lack of commonalty with the -900 means two sub fleets so you are better off with just the 900.

          • “That leaves BA, Lufthansa, Singapore, ME3. JA and NCA as the big players (or former big players, have to see on ME3).”
            Theres over 40 customers for the B737-300ER family ( and some more that only have 777F).

            “Most airlines cant fill a 777-300 flight”
            Then they use the 777-200 or 787-9 for same route. Air Canada has some of its B777-300ER in high density seating with 400 passengers.
            They do that so they can sell more seats, other are premium heavy configuration like British Airways, so they need the space and payload to fly max distances.
            Up to 50 airlines or cargo carriers voted with their cheque books to buy a 1000 or so of a family of planes in the 777-300ER weight class. That need isnt going away.
            Thats not including the earlier -200 and -300 models, which match newer planes like 787-9/10 or A350-9

  7. So, Ethihad is going to dump the 777F for an A350F that is not even designed yet?

    Good think I had not started in on my tea, I would have snorted it up (unlike most red-blooded Americans I hate coffee!) Put me in with the Brits as I often drink it with sugar and canned milk.

    And is the 777-9 by the way, not the 777-8. And it could be the 777-10 if Ethihad needs a big aircraft.

    • What many do not understand is that the shipping cans are a big deal for interchange.

      The A350F (if it happens) introduces a new can or a lot of wasted space.

      I saw FedEx was a lot of space using the old 747 and MD-11 cans.

      The 777 took a taller can to utilized more space. The 767 cans had a different footprint.

      All you equipment has to be adjusted to make that work.

      So, you buy a new A350F and go through all that when you have paid for 777F? I don’t think so.

  8. According to Tim Clark the A350-1000 can only carry 317 seats in Emirates configuration.

    • Which makes no difference at all if his load factors on the 777-9 aren’t higher than 85%.

    • Emirates has many configurations , like a lot of airlines ( except LCC).
      A380 comes in 3 : with 615 seats to 489.
      The 777W is 3 as well up to 427 seats . ( yes you read that right)
      Different types of routes have different needs for premium seats

  9. Confirmed

    Reuters: The recently “re-grounded” B737 MAX will drag on longer than “initially expected”.

    • … sure, if you want to make a good job, you check all groundings.

      It should be normal in the first place to have a good grounding policy, but surprisingly Boeing lost it. So now they start with elementary school.

      … and if you want to make a good job, you not only check the MAX.
      Once they are there, they can say WE OWN GROUNDING SAFETY

      In the meantime Embraer, BBD, Airbus, Comac and Irkut are laughing
      and Delta is laughing about Southwest, Alaska and Ryan too and Etihad might think long about its Boeing orders.

      • Gandalf (Tolkien) once said:
        “The prisoner who has escaped from the roof will think twice before re-entering by the front door”.

        One would have thought that, after initially burning their fingers on the MAX, airlines such as Alaska, Ryanair and Southwest would have been more cautious. But no, they bought the “most scrutinized plane in history” hype and ran back for a yet another grounding!
        Pure masochism.

        • You keep portending this as the end of the world for the MAX.

          It is not. Its an easy fix. Actually the surprise is they seem to be taking it seriously and looking at the associated possible problem areas and coming up with a plan.

          The issue is the stupidity that got them to where it needed to be fixed.

          What both Boeing and the FAA should be doing (have not seen if they are) is, did they change anything else?

          In an of itself its not remotely fatal, its an easy fix.

          It should not have happened.

          GE had the same sort of issue on the GenX with a coating that corroded the shaft and shed the engine out the back. That was a move from hand build to industrialization.

          Why they can do that without testing is something I questions.

          RR had the same issue in bulk build on the Trent 900. Their quality control on a manifold sucked. Why that happened is a question that has never been answered.

          Why did the UK release the PW 777s back into service?

          Previously that inspection was not finalized and did it magically get finalized and why did it miss so many bad blades?

          Why did the EU allow two bad engines on the Norwegians 787? One bad engine should not be allowed. India of all places put the kabosh on that when the GTF issue his Indigo. Rest of the world says, its ok with a known iffy engine. India said you have two know good engines or you don’t fly.

          The realty is the system allows a lot of flaws to get in and it does not mandate dealing with the flaws they know about immediately, sometime they are given years to fix.

          Its not just the MAX that is a risk, they all are and for those who cast stones they would be well advised to acualy read up on the industry, now it works and the daily risk factor.

          Yes, Boeing has issues, yes the MAX has issues, but if you think the rest of the industry does not you are truly deluding yourself.

          • @Trans

            No one here is suggesting the demise of the 737 Max. What seems to be the common theme, is that Boeing is limping from crisis to crisis with the type, after a slew of positive “most scrutinized, safest” vibes.

            If it were such ‘an easy fix’, as you put it – why are the 109 aircraft still sitting on the ground, after 3 weeks and why have Boeing paused deliveries? An easy fix was the gtf engine issue on the Swiss A220’s that took them out for a day.

            We have heard an endless diatribe of positive corporate-speak from BA for over two years, about the Max.

            You can try and run down the messengers, but the facts still remain.

  10. Long ago Airbus posted this PR picture. It may be jumped up, but reality is the 777’s, old and and new, are relatively heavy compared to A350s. Weight always is an aircraft cost driver. And that refuses to go away.

    s://static.seekingalpha.com/uploads/2014/12/9932311_14186689180693_0.png

    I remember suggesting going back to the drawing board when the first 777x OEW and cost figures started to leak, but faith always remained high.

    Most people doubted the A350-1000 would be a success with just 265 ordered. They ignored the hundreds of conversion rights in the big A350 backlog.

  11. The conversion has been from A350-1000 to the-900. Maybe the industry know something that commenters on this forum are missing.

    • At some point Singapore Airlines, Emirates, United, Air France, Air China, Turkish might want to replace their 77Ws.

      Of course, they are stumbling over each to get 777-9’s. Or order 787-10’s, if payload-range requirements are suitable..

      Alternatively they can convert some of their A350-900 orders to -1000’s. Or, god forbid, direct order some -1000s.

      And there might be some new customers, e.g. Qantas, Korean, Air Canada, AA. Specially if the -1000 proves low risk, efficient and capable. BA, CX, Qatar and Virgin seem ok. We will see.

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