Emirates and Etihad defy all logic

It's remarkable to realise how the UAE has created two of the world's greatest airlines, says Anil Bhoyrul
Emirates and Etihad defy all logic
By Anil Bhoyrul
Sun 09 Oct 2011 10:18 AM

We’re getting close to our annual Arabian Business Awards at the end of November. One of the perks of the job is you get to see a lot of huge success stories. For all the doom and gloom blowing from the West, I can assure everyone that there has been no shortage again of outstanding business performances across all sectors.

All will of course be revealed on the big night on Sunday, Nov 20, though I couldn’t help but notice two companies in the same sector that seem to defy all logic. Two companies, in the most challenging of conditions, that keep delivering.

I’m talking about Emirates Airline and Etihad Airways. Political instability, natural disasters and a host of other problems have made aviation one of the worst industries to be in. Yet in March, Emirates announced its net profit race up 52 percent to $1.5bn (for the year to 31 March), while passenger numbers rocketed 14.5 percent to 31.4 million. Revenues, up 25 percent, are now close to a staggering $15bn a year. No wonder the experts are suggesting Emirates could place orders for more than 30 new A380s and Boeing 777s at next month’s Dubai Airshow.

Can anyone hope to compete with that kind of performance? Well, apparently so. Etihad has just released its Q3 figures for 2011 and they show revenues rising 39 percent to $1.1 bn. Seat factors are now an incredible 80.7 percent. Etihad has only been around for eight years, but CEO James Hogan is confident that this will be the year of break even, with next year one of profit. And while Emirates now has 111 destinations, Etihad is not far behind with 86 destinations now on the books.

Now here’s where the figures get interesting: the International Air Transport Association (IATA) is predicting that total industry profits will fall from $6.9bn to $4.9bn over the next twelve months. So in other words, Emirates Airline already accounts for 20 percent of all the world’s airline profits put together. Given that most are facing massive losses, by simply breaking even, Etihad is also giving the global figures a huge boost.

If we look at 2012, assume Emirates profits rise a modest ten percent, while Etihad Airways turns in a small profit, let’s say just $50m. We now end up with the two airlines bringing in $1.7bn of profit. Or rather, based on IATA projections, Emirates Airline and Etihad Airways will in 2012 account for 35 percent of all the profits made by every airline on the planet.

This is just ridiculously brilliant, isn’t it?

I think it’s a two horse race which will be named airline of the year for 2011. Though in the meantime, for all the healthy competition and endless comparisons between the two, isn’t it remarkable how the UAE — a tiny nation with a population half that of London — has created two of the world's greatest airlines? Everyone has their views on which is better, but nobody can argue with the figures.

Trumped again

I don’t know anyone who hasn’t been captivated by the Amanda Knox case in Italy.

For all the drama, tension and tragedy, the dignity of all the families involved, their decency and level headedness has been breathtaking.

But someone had to spoil the party. You guessed who? Donald Trump, the US tycoon who was threatening to become US president. Whilst legal experts argued over the likely injustice of the case, Trump himself waded in last year with his own suggestion: “One solution is to boycott Italy until they decide to get serious and let her go.”

Is this guy for real or what? He added that the Italian prosecutor should himself be jailed because he prosecuted Knox in the first place (I don’t understand that logic either).

I only ever met Trump once, four years ago in Abu Dhabi. It was a strange encounter, which I will never forget.

I couldn’t decide at the time whether he was a genius or a complete fool. Now I know.

(Anil Bhoyrul is the Editorial Director of Arabian Business.)

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