x Abu Dhabi, UAEFriday 28 July 2017

Unrest will trim Emirates' strong profit

The region's civilian unrest is causing some travelers to cancel or postpone travel plans, Emirates said.

Regional unrest will dent Emirates Airline's financial results after demand dropped in recent weeks across its worldwide network, the company said.

But the airline is still expected to post a robust profit for its financial year ending on March 31 after reporting a record first-half profit of US$925 million (Dh3.39 billion).

Tim Clark, the president of the Dubai carrier, said flights across its global network were running 75 per cent full compared with the 82 per cent typical of this time of the year.

"The effect on the seat factor as a result of the unrest in the Arab world has been measurable the last six weeks," he said in Washington on Wednesday. "It's a pity because it's been a very strong year for us."

Emirates is the Middle East's largest airline and the world's largest carrier by international capacity. The airline, which owns some 25 subsidiary companies in travel, retail and hospitality, is also one of the most profitable carriers in the world.

The regional instability has caused business travel to fall across the affected countries, which include Egypt, Tunisia and Yemen, while Chinese business and tourist arrivals into the region had "disappeared", Mr Clark told Air Transport Intelligence magazine.

Instability in some other African countries apart from Egypt and Tunisia has hurt demand, while some travellers to Middle Eastern countries such as Jordan and Lebanon have altered travel plans on fears that unrest could spread to those areas, he said.

But the Emirates president predicted the disruptions to the carrier's global network would subside soon.

"In April we'll be in good shape," he said. If demand remained suppressed, the airline would reallocate its capacity from the affected countries to higher-demand areas, he said.

The unrest illustrates the cyclical fortunes of the airline industry, after the ash cloud crisis in Europe last year and concerns recently over higher fuel prices.

When an Icelandic volcano erupted last year, sending up an ash cloud that disrupted aviation, Emirates said the resulting European flight cancellations were costing it $10m a day.

 

igale@thenational.ae