Accounting Gimmicks And Hard Realities At Etihad Airways

One of the things we’ve learned in recent years from waves of financial scandals is that you can’t fool the accountants. And it’s especially hard to trick forensic accountants, the professionals specifically trained to identify “cooked books.” It was thus not especially surprising that forensic accountants recently showed that the $103 million profit that Etihad Airways claimed for its 2015 fiscal year was actually an operating loss of $2.06 billion; worse, that result was after Etihad’s government owners kicked in $1.7 billion in subsidies. Those poor results followed an operating loss of $1.4 billion and subsidies of $2.6 billion in its 2014 fiscal year.

That news came on the heels of Qatar Airways’ bogus financial results for fiscal year 2017, in which the airline claimed profits of nearly $540 million but according to investigators actually lost $703 million, nearly doubling its operating loss from the previous year. And that on top of FY 2017 state subsidies of $491 million. As the baseball legend Yogi Berra once said, “It’s déjà vu all over again.”

The accounting shenanigans at Etihad and Qatar Airways are not simply cases of sloppy bookkeeping at small, oil-rich states. The government subsidies violate the “Open Skies” aviation agreements that give the United Arab Emirates – home of Etihad and Emirates Airline – and Qatar unlimited access to the U.S. market. The language in these pacts is clear: you get to fly to any U.S. city as often as you want, charge whatever you want for tickets, but you cannot be subsidized. In every industry – steelmaking and solar panels are good examples from manufacturing – subsidies distort competition and threaten U.S. companies, their employees, and the communities they serve.

Etihad Airways, Emirates, and Qatar Airways have grown faster than any airline since commercial aviation began, thanks to enormous state support. Just since 2015, they have increased their flights to the U.S. by 50…

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