Antonoaldo Neves, CEO, Etihad Group
Etihad Group CEO Antonoaldo Neves has a dual mandate: On one hand, he needs the airline to make money, and on the other, he has to deliver outstanding customer service. The 49-year-old has already steered Etihad, which saw a few troubled years of restructuring and scaling down, towards profitability. But, to Neves, the performance is okay. “Okay is the right word,” he says, “as a leader, I can’t window-dress results.”
The Brazilian, who joined Etihad from TAP, the national airline of Portugal, has drawn up a seven-year plan in which he looks to double his fleet and triple the number of passengers. In India recently to celebrate Etihad’s 20th-year celebrations in the country, Neves spoke to Forbes India about his roadmap, why India is a key market and why Etihad has tied up with sports teams Chennai Super Kings (CSK) and Mumbai City FC. Edited excerpts:
Q. It’s been 20 years of Etihad’s operations in India. How has the business grown during this period?
Etihad celebrated its 20th anniversary about one year ago and we are celebrating the 20th anniversary of India operations now. Which means we started operating in India within the first year of our operations. India is an extremely important market for Etihad. We are bigger than ever in India, we would love to add more flights to India, we would love to add more cities to India.
Etihad in itself is a young airline—we are just 20 years old. That’s the lifetime of an airline like IndiGo. Most of the airlines around the world are 50-plus years old. So, we are like a startup. In our first phase of 15 years, we expanded a lot. And while we did great things during that period, like creating a major global brand, we made some mistakes too, especially on the financial side. And so, the last five years we spent in correcting that. During that time, we shrank and we reduced the size of the airline in India as well. But now we’re back. In 2022, there was a change in the shareholders, whereby the ownership of the Etihad Aviation Group was transferred to ADQ, an Abu Dhabi-based investment and holding company.
[Looking ahead], we plan to add 100 planes to the fleet over the next five years, we are going to triple the number of passengers. Rolling over the last 12 months, we have done 17 million passengers, as opposed to 10 million two years ago. So, the airline is growing again, is sustainable and is making money.
Q. How do you see India as a market?
An extremely important market. You have more than a billion people here, it’s a market that is growing a lot. Comparing India to Brazil, the country I come from, around 2008, both India and Brazil had about 80 million passengers. India today has more than 220 million passengers a year, while Brazil still has 80 million. What India is doing in the aviation space and in the overall economy development is outstanding. There is a lot of inclusion—a lot of people that have never flown before are now flying. The investments that we see in the airports are amazing. We have new airlines like Akasa coming in, Air India is being restructured. It’s a market I am really excited to be a part of.
Q. Would you say India is among your top three markets?
Of course. No doubt. And it’s not only because it’s growing, but also because we have a value proposition for India. The largest population in Abu Dhabi comes from India, so we have a lot of people commuting back and forth. There are a lot of investments that India is doing together with Abu Dhabi. We have a financial hub in Abu Dhabi, and India has a strong presence there. We’re interested also because there’s a lot of business tourism between these two places.
Also read: Air India: The story of a lost opportunity
Q. Last year, you launched Journey 2030—your plan for the next seven years. Where does India feature in those?
We currently have 176 flights per week from India; we can add almost 65 percent more in the next five to six years, so that’s easily 20,000 seats. It’s also part of our plan to add more cities. Today, we have flights to 11 destinations in India, we believe there are about five more that we can add in the next five years.
Q. You were the principal sponsor for CSK for IPL 2024, you’ve recently signed a multi-year deal with Mumbai City FC. How do you think these will move the marketing needle in India?
The way we see these marketing activations is that we want to be more local. Etihad in the past was focussed a lot on Europe, and while it remains extremely important, we fly a lot of people from India, from GCC. We need to be able to take advantage of the diversity we have in our company and be more local. We need to understand the specificity of each market. We are not a huge airline—we don’t have 500 planes—and the only way I can compensate for the scale that I don’t have is by being nimble. I need to be there in the market, and these two sponsorships that we have and the one that we have with Katrina Kaif as the brand ambassador speaks about that.
Q. Etihad reported a 21 percent rise in revenues, 48 percent increase in profit in the first half this year. What’s your assessment of the performance?
I think we’re doing okay. Okay is the right word.
I think the work that the team is doing is terrific. To take an airline that was break-even in 2022 to one that is delivering the profitability is outstanding work. The execution capability is mind-blowing. But my obligation as a leader is to define reality and not window-dress anything. And the reality is that our results are average when you compare the global results, or a little bit lower than average. About two years ago, we were bottom quartile. Now we are about average.
But I think it’s extraordinary that we are still expanding margins in a year the industry is contracting margins. We’re doing an outstanding job, but the end result is you need to improve. I need to get Ebitda 23-24 percent, and I am still roughly at 19-20 percent. But we still have margin expansions to come, and we’re going to get there.
Q. Etihad’s profitability has started to come after a few troubled years of restructuring and scaling down. What are the key factors behind the turnaround?
First of all, the scaling down happened before I arrived. It cut to the bone. The airline divested a lot of non-core assets, like the catering company, to focus on core assets. The other thing is Abu Dhabi opened for competition and that put a lot of pressure on Etihad to make money. Competition is great, competition pushes you. All of these happened before I came in, and I have to recognise these as I have to recognise that, before this phase, the work done in terms of safety, operating standards, customer service was outstanding. So, each phase contributed in a different way.
Most recently, we are driving efficiency and customer service. My mandate is very clear—to deliver extraordinary customer service and make money. To make money, I need to be efficient. To deliver extraordinary customer service. I need to invest in my product and people.
For instance, right now, we are changing from double catering—earlier we would take all the food and beverages from the UAE to India, and while returning we would again use UAE catering. Now, we’re using India catering. Next year, we are going to have 1.6 million meals from India. It will not only burn less fuel, we can also use different providers; that will improve quality through competition.
Q. There’s a lot of buzz about an Etihad IPO. What can you tell us about it?
We have no official confirmation about that. When and if we get the mandate from the board, we will have to publish that and we can’t hide it from the media.
What we have been doing is to live up to our obligation to make sure we are prepared for an IPO. We are working very hard to ensure the transparency level, the governance level, the business plan, the profitability are all at a point at which the shareholder can decide to IPO anytime. And if he doesn’t, it’s fine as well. Because, today, the airline is capitalised; we’re going to be investing $7 billion in new aircraft in the next five years. And we’re generating cash, so we don’t need money from the shareholders. IPO for us is much more to make sure that we have, in the future, different sources of capital to grow further.
Q. What are the biggest challenges for the aviation industry, and anything specific in the Indian market?
A big challenge is growth. What’s going on in Southeast Asia, in India, in Pakistan, in the Gulf region is something that we don’t see very frequently—you have more than 4 billion people. And if you add parts of China, it’s 5 billion. The economies are exploding, people are being included in that growing economy and they can now travel. The biggest challenge we have in the region is how to make sure we deliver growth. And deliver it now. Coping with growth and making sure that we have regulation—a business environment which is friendly to cope with growth—is extremely important.
To manage growth, you need to source aircraft, which is a challenge; you need to hire pilots, which is a challenge; you need to train pilots, which is a challenge. You need to invest in infrastructure, like airports—look at Mumbai, or the brand new one that has come up in Abu Dhabi. Making sure you have all the pre-requisites to deliver the growth that the customers want is a key challenge not only for India but also for the whole of Southeast Asia.