Emirates reports profit increase of 65 per cent as passenger demand grows

Emirates reported strong profit growth for the first half of the year. AFP

Lower fuel prices and higher passenger demand helped to boost Dubai’s flagship carrier Emirates, which posted a 65 per cent jump in first half net profit.

The airline, one of the world’s largest carriers of international passengers, reported a profit of Dh3.1 billion for the six months ending September 30, up from Dh1.9bn a year earlier.

Emirates, which operates the world’s biggest fleet of the Airbus A380 superjumbo aircraft, said first-half revenue was down 4.2 per cent to Dh42.3bn, compared to Dh44.2bn a year earlier.

“Our top-line figures were hit hard by the strong US dollar against other major currencies,” said the Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum.

He added that the currency exchange situation, together with the current regional conflict and a weak economic outlook, had plagued the positive effect of lower fuel prices during the first half of the financial year.

Fuel, the largest component of an airline’s cost, made up 28 per cent of Emirates’ operating cost, as opposed to 38 per cent during the same period a year ago.

“We made a calculated decision not to hedge our fuel purchases, which paid off as fuel prices continued to soften,” said Sheikh Ahmed.

The airline also made a decision to pass on savings from the lower fuel costs to its customers by reducing its air fares – helping Emirates to carry 25.7 million passengers between April 1 and September 30, an increase of 10 per cent on the same period last year.

Emirates also expanded its global route network by launching services to four new destinations – Bali, Indonesia; Multan, Pakistan; Orlando, Florida; and Mashhad, Iran.

“Despite the fall in revenues, this first-half performance by Emirates is fantastic,” said Saj Ahmad, the chief analyst at StrategicAero Research. “Especially given the regional turmoil around the GCC, in particular the decision to stop and then recommence flights in Iraq, as well as the humanitarian fallout from the woes seen in Syria and Yemen.”

During the first six months of the financial year Emirates received 13 wide-body aircraft – eight A380s, and five Boeing 777s. It also took out of service four older aircraft, resulting in a net increase of nine new aircraft for its fleet.

Revenue for the wider Emirates Group, which includes the airline services arm dnata, was down 2.3 per cent to Dh46.1bn, while profit was up 65 per cent at Dh3.7bn.

Separately, the International Air Travel Association revealed yesterday that Middle East airlines had a 9.9 per cent demand increase in September, down from 13.7 per cent year-on-year growth in August.

The industry body warned that major economies in the region, including Saudi Arabia and the UAE, have experienced slowdowns in non-oil sectors. Nevertheless growth rates are still robust, it said.

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