The Abu Dhabi-based group made a loss of $1.52 billion from its “core operations” in 2017 – a 22% improvement on a loss of $1.95 billion during the previous year.

Etihad’s revenue rose by 1.9% to $6.1 billion year-on-year, despite a “significant moderation of capacity growth”. While the company also cut unit costs by 7.3% despite having to pay an extra $337 million in fuel costs due to the higher price of oil.

The airline carried 18.6 million passengers in 2017 with a load factor of 78.5%. Capacity, as measured by available seat kilometres (ASKs), increased by 1% during the year.

The group also faced other significant “challenges” last year as a minority shareholder in two major European airlines, Alitalia and airberlin, which went into administration.

Tony Douglas, group chief executive of Etihad Aviation Group, said: “We made good progress in improving the quality of our revenues, streamlining our cost base, improving our cashflow and strengthening our balance sheet.

“These are solid first steps in an ongoing journey to transform this business into one that is positioned for financially sustainable growth over the long term.”

Mohamed Mubarak Fadhel Al Mazrouei, chairman of the group’s board, said 2017 was a “pivotal year in Etihad’s transformation journey”.

“The board, new executive leadership team and all our employees worked extremely hard to navigate the challenges we faced,” he added. “We made significant progress in driving improved performance and we are on track in 2018.”