By Sam Bridge
45-day runway closure at Dubai International Airport hits revenue but Emirates airline posts 282% jump in net profit
Emirates Group on Thursday announced a 8 percent rise in half-year net profit to AED1.2 billion ($320 million) despite a fall in revenues due in part to the 45-day runway closure at Dubai International Airport.
Group revenue was AED53.3 billion for the first six months of 2019-20, down 2 percent compared to the same period last year due to the Southern runway closure and unfavourable currency movements in Europe, Australia, South Africa, India, and Pakistan, the company said.
Profit improvement was primarily due to the decline in fuel prices of 9 percent compared to the same period last year, although this was partially offset by negative currency movements, it added.
The group's cash position on September 30 stood at AED23 billion compared to AED22.2 billion as at March 31.
Emirates airline carried 29.6 million passengers between April and September, down 2 percent from the same period last year but passenger yield increased by 1 percent while the volume of cargo uplifted at 1.2 million tonnes decreased by 8 percent while yield declined by 3 percent, reflecting the tough business environment for air freight in the context of global trade tensions and unrest in some key cargo markets.
Emirates' net profit was AED862 million ($235 million), up 282 percent, compared to last year while revenue of AED47.3 billion was down 3 percent.
It said the jump in profit was mainly thanks to a drop in operation costs and fuel prices.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO, Emirates Airline and Group said: "The Emirates Group delivered a steady and positive performance in the first half of 2019-20, by adapting our strategies to navigate the tough trading conditions and social-political uncertainty in many markets around the world.
"Both Emirates and Dnata worked hard to minimise the impact of the planned runway renovations at DXB on our business and on our customers. We also kept a tight rein on controllable costs and continued to drive efficiency improvement, while ensuring that our resources were deployed nimbly to capitalise on areas of opportunity.
"The lower fuel cost was a welcome respite as we saw our fuel bill drop by AED2 billion compared to the same period last year. However, unfavourable currency movements wiped off approximately AED1.2 billion from our profits."
He added: "The global outlook is difficult to predict, but we expect the airline and travel industry to continue facing headwinds over the next six months with stiff competition adding downward pressure on margins. As a group we remain focused on developing our business, and we will continue to invest in new capabilities that empower our people, and enable us to offer even better products, services, and experiences for our customers."
The company said its employee base remained unchanged compared to March at an overall average staff count of 105,315.
Dnata reported revenue at AED7.4 billion while profit was down by 64 percent to AED311 million compared to last year's result which included an AED321 million one-off gain from the divestment of dnata's 22 percent stake in the travel management company Hogg Robinson Group (HRG).
Dnata's half year profit for 2019-20 was further impacted by the bankruptcy of Thomas Cook, one of its major customers for dnata's travel and catering businesses in the UK, resulting in an impairment loss on trade receivables and intangible assets amounting to AED84 million.