Emirates Group net profit soars 77% in first half to Dh2.3 billion
Emirates Airlines' profit more than doubles to Dh1.7bn as it carries more passengers and revenues climb
Emirates Group, owner of the largest airline in the world, saw its net profit surge 77 per cent to Dh2.3 billion in the first-half of its fiscal year, with its carrier also reporting stellar results on the back of capacity optimisation, efficiency initiatives and the easing of the US dollar.
The Dubai-based group said revenues for the first six months of 2017-18 financial year rose 6 per cent to Dh49.4bbn from Dh46.5bn in the year earlier period. Revenue growth was strong in spite of continuing downward pressure on margins, a rise in oil prices, and other challenges for the airline and travel industry, it added.
Profit for Emirates, the airline which operates the world's largest fleet of wide body aircraft, soared 111 per cent to Dh1.7bn, as it carried more passengers. The carrier's performance was a marked improvement from last year's annual results which saw profits plunge 82 percent. Revenue passenger kilometres (RPKM) in the reporting period climbed 5 per cent with average passenger seat factor rising to 77.2 per cent. Emirates revenue, including other operating income, of Dh44.5bn advanced up 6 per cent in the first half of this year, boosted in part by improved seat load factors and tight control on capacity deployment.
“Our margins continue to face strong downward pressure from increased competition, oil prices have risen, and we still face weak economic and uncertain political realities in many parts of the world," Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of the airline and the group said. "The group has improved revenue and profit performance. This speaks to the resilience of our business model, and the agility of our people."
The group, which reported a 70 percent decline in profitability for 2016-17 financial year as lower oil prices weighed on Arabian Gulf economies and travel demand dipped globally, cut its employee base by 3 per cent in the in last six months to 102,669. That was a result of natural attrition together with a slower pace of recruitment, as various parts of the business adopted new technologies, streamlined business processes and re-allocated resources, the company said.
Emirates, along with other Middle Eastern carriers, was hit hard by tough operating conditions amid travel restrictions on US routes, a ban on laptops and subsequent restrictions on larger electronic devices has bounced back with the easing of the strong US dollar against other major currencies. The ban resulted in a dip on routes to the US by as much as 20 per cent, the carrier's president Tim Clark said in an interview with The National in July.
"Better exchange and currency rates are key to Emirates’ 111 per cent profit rise for the first half of the year," Saj Ahmad, chief analyst at StrategicAero Research said. "Given the earlier impact of the travel ban, which was followed up by the electronics ban and a backdrop of increased competition that had slashed both yield and profit margin, Emirates’ results show the fruits of a turnaround plan that involves leveraging the strength of its network and brand alongside smaller family member, flydubai."
Emirates and Dubai-based no-frills airlines flydubai have deepened their codeshare agreement to ratchet up a bigger slice of the regional aviation market as competition intensifies. Since the two Dubai-based airlines revealed their tie-up in July, they have launched codeshare routes to 45 destinations with plans to build a joint network of 240 destinations by 2022.
"Despite the challenges, Emirates’ own footprint continues to expand and with the closer working relationship with flydubai, integrating their networks and operations to better deploy resources will become an ever-more judicious process as they combat markets where excess capacity has eroded yields for everyone," Mr Ahmad noted.
Emirates' fleet seize continued to grow. The carrier received its 100th Airbus A380 super jumbo aircraft earlier this month, and 10 wide-body aircraft in the first six months of its fiscal year. The carrier expects 9 more aircraft to join its fleet before the end of the financial year. As of 30 September, Emirates’ global network spanned 156 destinations in 84 countries while its fleet stood at 264 aircraft including freighters, according to the company.
The airline carried 29.2 million passengers between 1 April and 30 September 2017, a 4 per cent rise from the same period last year. The volume of cargo increased to 1.3mn tonnes, or 5 per cent while yield improved 8 per cent year-on-year, boosted by investments in products and services and gradual recovery in the global air freight market.
Operating cost for the carrier rose 4 per cent with fuel remained the largest component of its cost base, accounting for 26 per cent of total operating costs compared with 24 per cent in the first six months of last fiscal year. The group's ground-handling and tour operations unit dnata, whose global business spans 84 destinations, reported a 20 per cent increase on the back of cost efficiencies across all business streams.
"Moving forward, we will continue to keep a careful eye on costs while investing to grow our business and provide our customers with world-class products and services,” Sheikh Ahmed said.
Updated: November 9, 2017 02:50 PM