Emirates Group sees 53% profits slump as fuel costs rocket

Dubai's Emirates Group says half-year net profits hit by significant rise in oil prices, and unfavourable currency movements in certain markets
Emirates Group sees 53% profits slump as fuel costs rocket
Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO, Emirates Airline and Group.
By Sam Bridge
Thu 15 Nov 2018 03:23 PM

Emirates Group on Thursday announced a 53 percent fall in net profit for the first six months of the 2018-19 financial year as fuel price rocketed.

The group which includes Emirates Airline and air services provider dnata, said profits were impacted by the significant rise in oil prices, and unfavourable currency movements in certain markets. 

Revenue was AED54.4 billion ($14.8 billion) for the period, up 10 percent from the same period last year but net profit fell sharply to AED1.1 billion ($296 million).

The company’s cash position on September 30 was at AED21.5 billion, it said in a statement.

Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO, Emirates Airline and Group said: “Emirates and dnata grew steadily in the first half of 2018-19. Demand for our high quality products and services remained healthy, as we won new and return customers across our businesses and this is reflected in our revenue performance.

"However, the high fuel cost as well as currency devaluations in markets like India, Brazil, Angola and Iran, wiped approximately AED4.6 billion from our profits.

“We are proactively managing the myriad challenges faced by the airline and travel industry, including the relentless downward pressure on yields, and uncertain economic and political realities in our region and in other parts of the world. We are keeping a tight rein on controllable costs and will continue to drive efficiency improvement through the implementation of new technology and business processes.

“The next six months will be tough, but the Emirates Group’s foundations remain strong. I’m pleased to note that our home and hub in Dubai continues to attract travel demand, as the airline saw 9 percent more customers enjoying Dubai as a destination in the first half of 2018-19 compared to the same period last year.

"We expect this demand to remain healthy as new attractions come online and the city gears up for Dubai Expo 2020. Moving forward we are firmly focussed on sustaining our business. We will do this by being agile to capitalise on opportunities, and investing to serve our customers even better with high quality products that they value.”

In the past six months, the Group’s employee base reduced by 1 percent compared to March 31, from an overall average staff count of 103,363 to 101,983, he added.

Emirates carried 30.1 million passengers between April and September, up 3 percent from the same period last year. The volume of cargo uplifted at 1.3 million tonnes is largely unchanged while yield improved by 11 percent.

In the first half of the 2018-19 financial year, the airline's net profit was AED226 million ($62 million), down 86 percent compared to last year. Emirates revenue, including other operating income, of AED48.9 billion ($13.3 billion) was up 10 percent.

On average, fuel costs were 42 percent higher compared to the same period last year, this was largely due to an increase in oil prices. Fuel remained the largest component of the airline’s cost, accounting for 33 percent of operating costs.

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