Emirates Group H1 profits slide 64% to $364m

The Emirates Group has reported a net profit of Dh1.3 billion ($364 million) for the first six months of its 2016-17 financial year, down 64% compared to the same period last year.

The group held steady on revenue, but profit was hit by the double impact of a strong US dollar and challenging operating environment for the airline and travel business, it said.

The Emirates Group revenue was Dh46.5 billion ($12.7 billion) for the first six months of its 2016-17 financial year, up 1% from Dh46 billion ($12.5 billion) during the same period last year.

The group’s cash position on 30September 2016 was at Dh14.9 billion ($4.1 billion), compared to Dh23.5 billion ($6.4 billion) as at 31March 2016. This is due to ongoing investments mainly into new aircraft, airline related infrastructure projects, business acquisitions, and the repayments of bonds totalling Dh4.1 billion ($1.1 billion), loans and lease liabilities, the group said.

“Our performance for the first half of the 2016-17 financial year continues to be impacted by the strong US dollar against other major currencies. Increased competition, as well as the sustained economic and political uncertainty in many parts of the world has added downward pressure on prices as well as dampened travel demand,” said Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.

He added: “The bleak global economic outlook appears to be the new norm, with no immediateresolution in sight. Against this backdrop, the Group has remained profitable and our solid business foundations continue to stand us in good stead. In the first six months of this year, both Emirates and dnata continued to grow in capability and capacity. Our past investments in product and services arenow paying off, enabling us to retain valued clients and attract new customers - reflected in the airline’s passenger growth of 2.3 million. We continue to make strategic investments, because we know we have to work even harder for every customer, and make every dollar spent go even further through innovation and driving efficiency across our business.”

In the past six months, the Group continued to develop and expand its employee base, increasing itsoverall staff count to over 103,000, a 9% increase compared with March 31. This was mainly due to recent acquisitions in dnata businesses, and also required support for Emirates’ growing fleet.

Emirates airline

Emirates continues to invest in the most advanced wide-body aircraft to improve overall efficiency and provide better customer experience. During the first six months of the financial year, Emirates received 16 wide-body aircraft – eight Airbus A380s, and 8 Boeing 777s, with 20 more new aircraft scheduled to be delivered before the end of the financial year. It also retired 19 older aircraft from its fleet with further 8 to be returned by 31 March 2017.

Overall capacity during the first six months of the year increased 9% to 30.2 billion Available TonneKilometres (ATKM). Capacity measured in Available Seat Kilometres (ASKM), grew by 12%, whilst passenger traffic carried measured in Revenue Passenger Kilometres (RPKM) was up 8% with average Passenger Seat Factor dropping to 75.3%, compared with last year’s 78.3%.

Emirates carried 28.0 million passengers between April 1 and September 30, up 9% from the same period last year. The volume of cargo uplifted remained stable at 1.3 million tons, a solid performance in a challenging air freight market.

In the first half of the 2016-17 financial year, Emirates net profit is Dh786 million ($214 million), down 75%, following one of the airline’s best half-year performances during the same period last year.

Emirates revenue, including other operating income, of Dh41.9 billion ($11.4 billion) was slightly down by 1% compared with Dh42.3 billion ($11.5 billion) recorded last year. This is due to the unfavourable currency environment - where the US dollar continued to strengthen against most other major currencies; and increased competition resulting in lower average fares. The airline was also impacted by currency devaluation and hard currency shortage in some African countries, as well as dampened travel demand due to the ongoing economic malaise and looming security concerns across major markets in its network, it said.

Emirates operating costs grew by 5% against the overall capacity increase of 9%. On average, fuel costs were 10% lower compared to the same period last year. However, fuel remained the largest component of the airline’s cost, accounting for 24% of operating costs compared with 28% in the first six months of last year.