Today's Edition
A. SREENIVASA REDDY (ABU DHABI))
Fitch Ratings has upgraded Etihad Airways’ Long-Term Issuer Default Rating (IDR) and senior unsecured ratings to ‘AA-’ from ‘A+’, citing a strong improvement in the airline’s operating and financial performance. The Outlook on the rating is Stable, according to Fitch’s assessment.
Fitch’s Long-Term IDRs range from AAA (lowest risk) down to D (default). The scale helps investors assess an issuer’s ability to meet financial obligations over the long term.
Fitch said the upgrade reflects a stronger standalone credit profile, meaning Etihad’s own financial strength has improved significantly. As a result, the airline’s rating is now set one notch below Abu Dhabi’s sovereign rating of AA/Stable, compared with two notches earlier, under Fitch’s Government-Related Entities (GRE) criteria.
Fitch added that its assessment of government support remains unchanged and continues to be viewed as “Extremely Likely.”
The rating agency highlighted the robust turnaround in Etihad’s operations through 2025 as a key driver of the upgrade. “Following the completion of its turnaround plan in 2022 and large capital injection in 2023, the airline is now benefiting from a more optimised cost base and healthier capital structure,” Fitch Ratings said.
It added that performance improvements in 2025 were evident across all key indicators, including capacity growth, higher load factors and tighter cost management, which supported stronger earnings and further debt reduction.
Fitch expects Etihad’s EBITDAR gross leverage — a measure of debt relative to operating cash earnings before rent and aircraft costs — to decline to 1.8x by the end of 2025, from 2.8x at the end of 2024. While leverage is forecast to rise gradually to 2.4x by 2028 due to higher capital spending on fleet expansion, Fitch said this would remain consistent with Etihad’s improved credit profile.
The agency also pointed to strong results in the first nine months of 2025, with EBITDAR up 27% year on year, driven by growth in both passenger and cargo traffic.
Capacity expanded as the airline added 19 aircraft, while demand remained strong, pushing the load factor to 88%. Fitch expects EBITDAR to reach around Dh5.7 billion in 2025, with a margin of 19%, up from 18.4% in 2024.
A central pillar of the rating remains government support. Fitch rates Etihad one notch below Abu Dhabi, its indirect shareholder, reflecting the airline’s close links to the government.
Etihad is fully owned by ADQ, which Fitch described as having close control over the airline’s strategic planning and finances through board representation. Fitch assumes Etihad will remain wholly owned by ADQ.
The airline has a track record of receiving state support in the form of equity injections, grants and shareholder loans. “We do not assume further tangible support from the parent over the medium term due to the airline’s improving standalone creditworthiness, but we expect ADQ and the government to be committed to supporting it if needed,” Fitch Ratings said.
Fitch also underlined Etihad’s strategic importance to Abu Dhabi, describing it as a key contributor to economic diversification, tourism development and non-oil growth. The airline is a major employer, with about 13,000 staff at the end of September 2025.
The agency said an Etihad default could have broader implications for other government-related entities, reinforcing the incentive for continued support.
In its forward-looking assessment, Fitch said Etihad’s 2030 strategic plan is ambitious, targeting a 13% compound annual growth rate (CAGR) in available seat kilometres through 2030, supported by an expansion of its fleet to 200 aircraft, from 115 as of September 2025.
Etihad is also expected to benefit from the strengthening of Abu Dhabi’s connectivity through the new Terminal A, which aims to capture additional transit traffic.
The new terminal provides the airline with significant capacity for expansion. Fitch noted that Etihad is increasing frequencies on major routes and introducing A321LR aircraft to enhance its competitiveness.
