Treasury Today Country Profiles in association with Citi

Etihad Aviation Group

Best Trade/Supply Chain Finance Solution Highly Commended: Etihad Aviation Group

Adnan Al Hendi, Etihad Aviation Group and Meg Coates

This SCF solution is fully complementary to Etihad’s existing infrastructure without the need for any manual intervention for the airline or its suppliers. The implementation of this solution is also in line with their treasury transformation agenda to centralise treasury operations in the UAE, including a complete overhaul of their working capital activities, systems, processes, technology and infrastructure.

Photo of Adnan Al Hendi, Etihad Aviation Group and Meg Coates.

Adam Boukadida

Acting Group Treasurer

View biography

The Etihad Aviation Group comprises Etihad Airways, the Hala Group of travel and tourism management and loyalty companies as well as Etihad Airport Services and group support functions required to interface with and support its subsidiaries, joint venture companies and equity partners. Etihad Aviation Group is headquartered in Khalifa City, Abu Dhabi and is Government-owned.

SCF solution takes off across MENA region

The challenge

Since inception of the airline in 2003, Etihad has been utilising a suite of traditional trade finance solutions, such as letters of credit, bank guarantees and trade collections, to optimise its working capital. However, to support and optimise its growing supply chain network, the airline was keen to explore more innovative solutions so it embarked upon a supply chain finance initiative with one of its key relationship banks.

The solution

The SCF solution is fully complementary to Etihad’s existing infrastructure without the need for any manual intervention for the airline or its suppliers. The implementation of this solution is also in line with their treasury transformation agenda to centralise treasury operations in the UAE, including a complete overhaul of their working capital activities, systems, processes, technology and infrastructure.

Through this programme, Etihad aims to support its suppliers in getting them an accelerated cash flow and enhanced liquidity. Suppliers also benefit by having access to funding at preferential interest rates, based on Etihad’s strong credit rating.

Supply chain finance is a set of solutions that optimises cash flow by allowing companies to extend payment terms to their suppliers, while enabling suppliers – generally small and medium enterprises – to get paid earlier.

The invoices accepted by Etihad will be electronically transmitted to their bank for the bank to arrange the payment immediately to its suppliers. This SCF programme offers the flexibility to Etihad’s suppliers to either opt for automatic discounting of all accepted invoices or manually select invoices for discounting.

James Rigney, Group CFO of Etihad Aviation Group, said, “Etihad Airways has always been at the frontline of driving efficiencies and creating an empowering environment for stakeholders. We are happy to be the first users of First Abu Dhabi Bank’s (FAB) supply chain programme. As the airline continues to innovate and grow, this solution will help us support and drive liquidity throughout our supply chain. We are looking forward to pursuing our partnership with FAB in order to serve the interests of our customers across the world.”

Best practice and innovation

Etihad has extended the SCF programme to include six other Etihad entities in the UAE. Adam Boukadida, Acting Group Treasurer explains, “We continue to on-board suppliers for these entities, including international suppliers through the bank’s dedicated supplier on-boarding team and international branches. The upgraded SCF platform allows for straight through processing with no manual intervention from us.”

Key benefits

Qualitative benefits:
  • SCF platform is fully automated with straight through processing (STP) capability and fits into Etihad’s existing technology infrastructure.

  • Using the SCF solution, Etihad are able to pay their suppliers much earlier in the process and support their liquidity position.

  • The solution drives operational efficiencies for both Etihad and their suppliers.

  • The online solution has multiple reporting capabilities that allow Etihad to track due dates and ensure payments are released on time.

  • Etihad’s suppliers too have access to SCF platform, which provides real time visibility on invoice approval.

Quantitative benefits:
  • 100% success in onboarding suppliers to the programme.

  • Upon full roll-out, Etihad will be able to increase liquidity for their suppliers by infusing millions of AED in their supply chain, using SCF solution.

  • Suppliers of Etihad are able to access liquidity at cost better than their individual credit (more than 50% savings in supplier’s existing interest costs).

  • Etihad has been able to reduce its invoice processing times significantly and invoices are approved much faster (more than 50% reduction in processing times).

Portrait of Adam Boukadida

Adam Boukadida

Acting Group Treasurer

Adam Boukadida is the Group Treasurer (acting) at Etihad Aviation Group. Prior to joining Etihad, Adam was the Senior Vice President and Group Head of Global Market Operations at National Bank of Abu Dhabi. His previous UK treasury experience also includes several years at Tesco, Kimberly Clark and The Royal Bank of Scotland. Adam is an ACI and ACT qualified treasurer and holds an executive MBA.

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