Fitch, which is an agency of global credit ratings, has rated the Etihad Airways an ‘A’, a rating that has been gladly welcomed by the airlines.
This rating was based on the IDR, which is the Issuer Default Rating, which took a look at a detailed analysis of Etihad’s commercial performance, equity alliance strategy, and its business.
James Hogan, who is the Chief Executive Officer and the President of Etihad Airways, has stated that their finance was raised on commercial terms, with no letters of comfort or sovereign guarantees.
He also states that they have raised over $11 billion with the help of over 80 financial institutions worldwide to support their expansion, and that they have always maintained transparency in their operations. And so, with their first credit rating, this transparency has been taken to another level.
Finally, he adds that this rating will actually be profitable for the airlines, as it will help give international investors a clearer insight into the airline while they continue to expand and raise more finances.
What the Fitch ratings actually state:
Although Etihad Airlines is relatively new and was only established in 2004, they have managed to grow at a rate much faster than that of their rivals, some of which have been in the airline business for much longer. Their growth can be credited to their growth model, which combined codeshare partnerships with organic fleet expansions and minor equity investments in some other airlines. Their global network scale has been compared to that of other established Gulf and European airlines, and they have also managed to establish a platform for other measured growth opportunities in the future. This just goes to show that for an airline to become successful, they need to have an established network, as that is what will underpin the cost management and the revenue generation.
One of the most important things that gives Etihad an advantage over all the American and European airlines is its hub’s geographical position, which is nearby the rapidly growing travel markets in Africa, Asia, and the Middle East. Etihad’s route network in these regions are a lot more developed, giving it a major advantage over some of the other European airlines that also want to dominate these routes and connect it to the US and Europe. Etihad’s increasing efforts to enter the American market would most probably be more successful in comparison to the efforts made by their American and European rivals.
Fitch recognizes the fact that the environment in which Etihad competes in is fiercely competitive, and they also recognize the fact that they have 3 very distinct advantages over similar airlines in the Gulf, which are shorter connecting time, greater domestic access because of their airline partnerships with key market places such as India and Europe, and the fact that they have a US pre-clearance at their hub in Abu Dhabi.