Emirates profit rises 50 per cent as oil price decline saves Dubai airline Dh9bn

Sheikh Ahmed bin Saeed, the Emirates chairman and chief executive, last month urged Airbus to find more customers for the world’s largest passenger aircraft, the A380. Ashraf Mohammad / Reuters

Emirates airline has reported a 56 per cent jump in net profit, but also warned the strong dollar would be a challenge this year.

A declining fuel bill helped the Dubai carrier report rising profit despite falling revenues.

Emirates made net profit of Dh7.1 billion for the financial year ending March 31. Revenue for the period was down 4 per cent at Dh85bn.

The company saved Dh9bn as oil prices declined, while the strong dollar negatively affected revenue by Dh6bn.

"Looking at the year ahead, we expect that the low oil prices will continue to be a double- edged sword – a boon for our operating costs, but a bane for global business and consumer confidence," Sheikh Ahmed bin Saeed, the Emirates chairman and chief executive, said at a news conference in Dubai.

The airline’s fuel bill fell by 31 per cent to Dh19.7bn a year earlier. Fuel now makes up 26 per cent of Emirates’ operating costs, versus 35 per cent in the previous financial year. However, it remains its biggest single cost.

“The strong US dollar against major currencies will remain a challenge,” said Sheikh Ahmed.

The UAE dirham is pegged to the US dollar, which makes it more expensive for travellers from many countries to visit the emirate.

“Currency fluctuations will continue to affect earnings and yield as nearly all of Emirates tickets sales are in foreign exchange,” said Mark Martin, the chief executive of Dubai’s Martin Consulting.

The wider Emirates Group, which includes the airline services arm Dnata, reported a 50 per cent rise in profit to Dh8.2bn. Revenue for the group fell by 3 per cent to Dh92.9bn.

During the year, Emirates flew 51.9 million passengers, up from about 48.1 million a year earlier.

The carrier received 29 new aircraft, its highest total during a financial year, including 16 Airbus A380s, 12 Boeing 777-300ERs and one Boeing 777 Freighter.

The Emirates president Tim Clark said on Tuesday that the airline would buy more of the current Airbus A380 model, the world's largest aircraft, even if the European plane maker Airbus decides not to build the A380neo version, which is more fuel-efficient.

“If they decide not to bring the neo into play, we will buy more of the current A380. We have 140 [A380s] on order, we have 77 today so we have quite a few more to go,” said Mr Clark on Tuesday.

In an interview with The National at the Dubai Airshow last November, the Airbus chief executive Fabrice Brégier said there was "no urgency" to build more fuel-efficient versions of the plane because of the low oil price.

Emirates made the A380 the backbone of its fleet and became the world’s biggest operator of the double-decker plane.

However, uncertainty has hung over the A380 programme, as Airbus struggles to find new buyers for the aircraft. Mr Clark also said that Emirates would continue to add destinations in the US, despite a long-running feud with US rivals over open skies.

“We are looking at other American points and to increase production on existing points,” said Mr Clark.

“We have got 10 [points] at the moment, we need that to be 20.”

Revenue growth from the Americas region was up 9 per cent at Dh12bn in the last financial year. Europe was the highest revenue contributing region at Dh24bn, down 5 per cent from a year earlier.

It was followed by East Asia and Australasia at Dh22.4bn, down 9 per cent from a year earlier.

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