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Etihad Airways and the Five Stages of FP&A Evolution

  • By Andrew Deichler
  • Published: 5/12/2015

When one of the world’s fastest growing airlines hosts a meeting to discuss financial planning and analysis, FP&A professionals are sure to attend.

That’s what happened last month when Etihad Airways and AFP hosted a Financial Planning and Analysis (FP&A) Club in Abu Dhabi, in the United Arab Emirates (UAE). Etihad, one of two flag carriers of the UAE and its second-largest airline, provided attendees with an in-depth look at the evolution of its award-winning FP&A function.

Etihad, Jim Kaitz, president and CEO of AFP, and Larysa Melnychuk, managing director of the FP&A Club, AFP, were joined by finance professionals from Nestle, IBM, Mars, 3W Networks, Mubadala, Abu Dhabi National Insurance Company, Agthia Group PJSC, Ipsos UAE, Miagen, AMMROC (Advance Military Maintenance Repair Overhaul Centre) and Abu Dhabi Capital Group LLC.

Etihad’s Shariq Daudi, head of long-term planning and budgeting, and Danysh Framroze, head of financial control – operations, network, fleet, led a discussion on the development of the airline’s FP&A department (known as financial planning and control, or FP&C, at Etihad). Founded in 2003, the airline has experienced rapid growth in recent years, both organically and through acquisitions. This growth had to be managed from a financial point of view, which is why Etihad set up its FP&A department.

Leaders of tomorrow

Over the past decade, Etihad’s FP&A function has become one of the best in the world. Last year, Etihad won the Financial Planning and Analysis Award at the gtnews Forum and Awards for Global Corporate Treasury and Finance in London.

Part of the reason why Etihad’s FP&A department has been so successful is a strong commitment to its people. The airline says its goal for FP&A is to “create the business leaders of tomorrow, with sound commercial knowledge.” The airline does this by:

  • Onboarding smart, young, financially sound leaders
  • Providing an intelligent resource pool to tap into
  • Protecting business unit leaders by ensuring governance is followed
  • Identifying, quantifying and managing cost reduction projects across business units
  • Supporting business units with successful implementation of approved initiatives.

“Etihad is very careful about the development of its people,” Melnychuk said. “They have the resources to hire the best in the world. The team is very international; there are representatives from many different countries there. They utilize best possible education in the marketplace.”

Culture and structure

Etihad employs a continuous cost improvement cycle strategy that has helped to ingrain the culture of cost awareness within its operating business units and drive behaviors. The result has been positive financial outcomes for the company.
 
 

FP&A is now working towards the ideal “leading” stage, in which planning is fully integrated with strategy. Compensation will be automatically linked with results. Real-time forecasting, scenario analysis, foreign currency conversion and long-term cash flow planning with treasury are all easily performed at this stage.

Throughout this process, Etihad’s systems have also evolved. FP&A began with Excel, then eventually adopted solutions from Oracle, and has now implemented Adaptive Insights. “This flexible and dynamic system really helped them define their FP&A department,” Melnychuk said.

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