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Emirates bounces back with improved profits

Posted 9 May 2018 · Add Comment

Emirates Group has reversed its fortunes after last year’s disappointing financial results reporting a full year profit of $1.1billion a 65% increase on last year’s performance.

The airline reported a profit of $760 million with a 9% increase in revenues. Ground handling business Dnata reported a record $350 million profit.
Business conditions improved over 2017-18 but rising oil prices have increased costs, and the company has faced "downward pressure" on margins from "relentless" competition, says chairman Sheikh Ahmed bin Saeed Al Maktoum (pictured left).
The organisation said geopolitical events had been the cause of last year’s dismal results. Sheikh Ahmed said many of these causes were continuing and the operating environment was tough with continuing political instability, volatility with currencies, and devaluation in Africa. However, he said that the airline had benefited from a “healthy recovery” in the global air cargo industry.
 

 

 

 

Analyst Saj Ahmad commented: “In reporting a 124% increase in profitability over the same period a year ago, Emirates has rode the wave of increasing passenger traffic, a return to higher yielding passengers on sectors such as the USA while benefitting from a continued restructuring effort aimed at suppressing costs and maximising the efficiencies and economies of scale of its huge dual Airbus A380-800 and Boeing 777 fleets.

 

“On the back of that, Emirates cash balance has soared to almost $7bn – much of this will be earmarked for continued development of its new cabin products as well as delivery payments for new airplanes as well as providing a good safety net for future investment as well as giving the airline a far better credit rating when exploring new financing instruments for future airplane acquisitions. This will be key when looking to expanding its 787 fleet, the first of which arrives in just four years from now.

“The rise in revenue by 9% to $25.2bn is married to an increase in seat factors to 77.% while passenger numbers went up to 58.5m underlining the “perfect storm” where Emirates has capitalised on returning capacity to high yield, money-spinning markets like the USA after the laptop ban as well as targeting more traffic connections with flydubai. Passenger yield was up marginally, but this shows that the airline is improving its revenue generation and is not trading price for additional passengers – and with oil prices on the rise, the airline has thus far resisted hiking fares too.”

Ahmad added: “Looking forward to this year, its clear that the early arrival of Ramadan will temper back performance a little for the first half of the year when Emirates next reports its earnings in November. But this is only a minor aberration because this leaves Emirates with a largely uninterrupted summer schedule where tourism and transit traffic through Dubai will see numbers rise significantly. Equally, the closer cooperation with flydubai, which will eventually see the smaller Dubai carrier integrate into Emirates’ Terminal Three will help to slash minimum connection times and boost passenger numbers for both entities – particularly because there is very little in the way of overlap on their networks.”

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