Etihad Airways has announced net losses of nearly $1.9 billion for 2016, as fuel hedging losses and financial exposure to equity partners including Alitalia and Air Berlin hit the carrier.

The carrier said that while the core airline business had “achieved steady passenger revenues of US$ 4.9 billion and 79 per cent load factors while carrying a record 18.5 million passengers”, a number of factors had contributed to the “disappointing” results.

These included losses on legacy fuel hedging contracts, and impairment charges relating to financial exposure to equity partners including Alitalia and Air Berlin.

The carrier said that a slowdown in the cargo market had also put increased pressure on cargo revenues and yields.

Commenting on the results, chairman of the board of the Etihad Aviation Group H.E. Mohamed Mubarak Fadhel Al Mazrouei said that the group had been “working since last year to address the issues and challenges through a comprehensive strategic review aimed at driving improved performance across the group, which includes a full review of our airline equity partnership strategy”.

Etihad recently sold its stake in Etihad Regional (formerly branded as Darwin Airline) to a Swiss subsidiary of Slovenia’s Adria Airways, while earlier this year the Gulf carrier was hit by the bankruptcy proceedings of Alitalia, in which Etihad owns a 49 per cent stake.

Last month the carrier announced a raft of ground and in-flight changes, including the removal of its free chauffeur drive service at all international destinations.

The airline’s CEO Peter Baumgartner said that Etihad was “in an industry characterised by overcapacity, declining market sizes on key routes, and changing customer behaviour as a weak global economy affects spending appetite”.

“Our answer to these challenges is innovation and reinvention, and this gives Etihad Airways a competitive edge as we seek to leverage opportunities offered to us by a changing environment,” added Baumgartner.

“Operationally, we performed well in 2016. We maintained load factor levels even as we increased capacity. Yields were under pressure in all cabins, with Business Class impacted particularly as corporate travel policies continued to encourage flyers to downgrade to Economy.