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Thu 10 May 2012 11:35 AM

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Emirates profit slumps 72% as fuel bill surges

Profits sag despite revenue at Arab world's largest carrier rising 14.9% to US$17bn

Emirates profit slumps 72% as fuel bill surges
The Emirates Airbus A380 registration A6-EDP lands at Munich Airport Franz Joseph Strauss on November 25, 2011 in Munich, Germany. Emirates Airlines has launched a new daily A380 service from Dubai to Munich with its first flight today. (Getty Images)

Emirates Airline, the Arab world’s largest carrier, posted a 72.1 percent slump in net profit in 2011, as its fuel bill surged 44.4 percent to US$ 6.6bn, the Dubai carrier announced on Thursday.

Despite profits tumbling to AED1.5bn (US$409m), the Dubai flag carrier marked its 24th consecutive year in the black.

Revenue reached a record high of AED62.3bn (US$17bn), up 14.9 percent year-on-year, but was dented by rising fuel costs, which saw its fuel bill surge 44.4 percent to AED24.3bn (US$6.6bn).

“While fuel costs will be a challenge again this year, Emirates can enjoy the fact that it has fuel saving Airbus A380s and Boeing 777-300ERs to be introduced to its fleet and as the airline expands, particularly across cash-rich cities in the USA like Dallas and Washington, they'll be able to further drive not just their revenue growth, but harness greater economies of scale through a more efficient distribution of their fleet on their network. That'll offset some of the expected price rises in fuel and suppress the immediate need for fuel surcharge increases,” said Saj Ahmad, chief analyst at StrategicAero Research.

“That said, Emirates performance and massive group revenue growth, augmented by its near US$5bn cash balance puts the airline far and away in a better position than any other airline in the world.”

Emirates Group as a whole posted a net profit of AED2.3bn (US$629m), with dnata, the aviation services division, posting its most successful year since it was set up 52 years ago.

With an increase of 58.9 percent over last year, dnata saw revenue rise to AED7bn (US$1.9bn). Overall profit for dnata also reached its highest ever point at AED808m (US$220m). This was on the back of operating costs rising 58.9 percent to AED6.2bn (US$1.7bn).

“Throughout the 2011-12 financial year the Group has collectively invested close to AED14bn (US$ 3.8bn) in new products," said HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO of Emirates Airline and Group.

This investment has garnered new customers and increased our international presence," he added.

During the year, the carrier added 22 new aircraft, its highest in any single year and added 11 new cities to its global reach.

Analysis showed no one region of the world contributed more than 30 percent of overall revenue, with East Asia and Australasia remaining the highest revenue contributing, up 17.6 percent to AED18.2bn (US$5bn).

Europe revenue rose 18.2 percent to AED17.1bn (US$4.6bn) and the Americas was up 21.3 percent to AED6.7bn (US$1.8bn).

Across the rest of the globe Emirates saw strong revenue from West Asia and the Indian Ocean rise 10.6 percent to AED7.1bn (US$1.9bn), the Gulf, Middle East and Iran was up 15.1 percent to AED6.3bn (US$1.7bn) and Africa generated AED6.1bn (US$1.7bn) in revenue, up 9.5 percent.

The airline carried a total of 34m passengers, an increase of eight percent, with passenger yield increasing 7.8 percent to 30.5 fils (8.3 US cents) per Revenue Passenger Kilometre (RPKM), up from 28.3 fils (7.7 US cents) a year ago.

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Jezinho 7 years ago

An interesting take on what by any industry standards is still a pretty phenomenal result. Show me how many other airlines made over USD 400m in 2011 (although Emirates' press release refers to a net profit of USd 629m). Maintaining a seat factor of 80% (when the number of available seat-km increased by 9.8%) without having to heavily discount is quite an achievement. A passenger yield of 8.8 US cents per RPKM is the envy of most of its competitors. So whilst net profit has fallen (albeit from a remarkable result in 2010/11), the airline has not really 'slumped'. It should get by given the AED 15.5 billion it had of cash at year end!

Graham 7 years ago

Are the Gulf airlines implying that they pay for Fuel at their base stations as well as at destinations

Faisal 7 years ago

all Emirates financial statements are published on their website unless you think the auditors that are approving their results are part of the conspiracy!!!!

Frequent flyer 7 years ago

Emirates also announced today that cabin crew will receive no annual bonus this year. Will be interesting to see how this affects customer service onboard. Certainly glad I'm not flying with them today!

Paul in dxb 7 years ago

That's just a sour comment. I suppose fuel for cars is subsidized also. Every European national carrier was subsidized for many many years. Now they are complaining gulf airlines have unfair government support. Emirates business model works and guess what their rates are not cheaper than other major carriers, in general the seat price is higher. Go figure, good marketing, good service, new aircraft. If you can't beat them , well maybe their business model is just better. Just a passenger.

Pete -Emirates frequent traveller for 15 years 7 years ago

Interesting to read that the slump is due to fuel. I have been travelling Emirates for the last 15 years. I have to say that service levels are DOWN and service to frequent fliers like myself are not important any longer. For example, the fact that frequent fliers are not allowed to invite a companion any more in order to save money, has stopped me to use Emirates. There are other carriers as good and who cares about their frequent travellers. Wake up Emirates and smell the roses. Arrogance is not part of the game any more.

Pete 7 years ago

Are these indipendent figures? Does it count if these are mere internal figures? Lived in the UAE for too long. Just a thought.