Emirates profit jumps as regional airports' expansion shows aviation sector resilience

GCC industry on the rebound after tough operating conditions last year

An Emirates Airline plane taxis at the Dubai airport in the United Arab Emirates, Wednesday, May 9, 2018. Emirates, the Middle East's largest airline, says revenue saw a boost over the past fiscal year, reaching $25.2 billion with profits of $762 million. (AP Photo/Kamran Jebreili)

This week has been one of the biggest in the aviation calendar with Emirates airline announcing its full-year results on Wednesday, hot on the heels of the latest Airport Show Dubai, where GCC operators outlined ambitious growth plans from expansion projects to IPOs as the Middle East travel market revives.

Dubai-based Emirates posted a stellar set of results demonstrating a clear turnaround from the 82 per cent profit drop reported in the previous 2016-17 fiscal year. This fiscal year to March 31 its profits more than doubled by 124 per cent to Dh2.8 billion, while Emirates Group profit rose 67 per cent to Dh4.1bn.

The latter was boosted by Dnata, the group’s ground-handling division, achieving record profit and revenues, and a strong cargo performance. Emirates airline benefited from higher revenues, improved seat capacity and relative strengthening of key currencies against the US dollar.

As one analyst pointed out, the initially destabilising impact of policies such as the laptop ban enacted in the first 12 months of the US presidency, as well as localised socio-political issues, have not been as disruptive as previously expected.

Still, Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum hinted that he wasn’t taking any chances and would continue to find efficiencies across the business. For a long-haul airline such as Emirates, rising fuel prices is a particular cause for concern.

The Middle East aviation sector could see further consolidation after Emirates announced a partnership with low-cost sister airline flydubai last year.

Atn Dubai's Airport Show, regional airport reprsentatives from Oman to Saudi Arabia highlighted the importance of aviation to their plans for economic diversification.

Saudi Arabia's third-biggest airport in Dammam will more than double its capacity by 2025 to handle the influx of visitors expected as the kingdom invests in tourism projects such as a Red Sea beach resort and multibillion-dollar Qiddiya theme park.

King Fahd International Airport, the eastern gateway to the kingdom, will expand its terminal to 30 million passengers annually, up from 12.6 million currently, as part of a multi-phased masterplan that may include a new terminal. This is the first phase of a 30-year plan to grow the hub, details of which will be announced in July.

Neighbouring Oman is studying a plan to sell a stake in the state-owned airports management company by 2020 as part of a privatisation push.

The sultanate aims to create more tourism jobs and boost visitors to the country. This includes plans to expand Muscat International Airport to take up to 100 million annual passengers in phases, depending on demand, a rise from the current capacity at its new terminal of 20 million passengers.

This year Oman hopes to boost passenger traffic by 14 per cent to 16 million travellers, driven by growth at national carrier Oman Air as it flies to new destinations in Russia and Morocco, as well as expansion of low-cost carrier Salam Air.