Etihad said it faced challenges ranging from significant fuel cost increases to costs associated with equity partners Alitalia and now-defunct Air Berlin.
The losses were smaller however compared to the $1.95 billion lost in 2016, a figure the airline revised upward from a previously reported $1.87 billion.
Revenue, meanwhile, inched higher from $5.9 billion in 2016 to $6.1 billion in 2017.
The Abu Dhabi-based airline's second consecutive annual loss comes as the long-haul carrier reduced its aircraft fleet from 119 to 115 last year.
Some 18.6 million passengers flew on Etihad in 2017, approximately the same as 2016. The airline flies to 93 destinations, including several cities in the United States.
Etihad's losses also come as it re-evaluates its business plans following last year's departure of CEO James Hogan, who'd served in the post since 2006. He was replaced by Tony Douglas.
In a statement Thursday, Douglas said the company made "solid first steps" toward transforming its business model.
"We made good progress in improving the quality of our revenues, streamlining our cost base, improving our cash-flow and strengthening our balance sheet," he said.
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