Profits at Emirates Group, the holding company for Dubai’s aviation businesses, fell by 64 per cent in the first half of the financial year 2016-17, as it was affected by the strength of the US dollar and a “challenging operating environment”.
Net profit fell to Dh1.3 billion on total revenue that was up by 1 per cent to Dh46.5bn in the six months to the end of September, compared with the same period last year – a record for the group.
The rate of decline was sharper at the Emirates airline division, where profit fell by 75 per cent, compared with the airport, travel and flight-catering operations of dnata, where profit fell by just 1 per cent.
Sheikh Ahmed bin Saeed, the chairman and chief executive, said: “Our performance for the first half continues to be impacted by the strong US dollar against other major currencies. Increased competition, as well as the sustained economic and political uncertainty in many parts of the world has added downward pressure on prices as well as dampened travel demand.”
He said: “The bleak global economic outlook appears to be the new norm, with no immediate resolution in sight. Against this backdrop, the group has remained profitable and our solid business foundations continue to stand us in good stead. In the first six months of this year, both Emirates and dnata continued to grow in capability and capacity.”
Airline-operating costs grew by 5 per cent against the overall capacity increase of 9 per cent. On average, fuel costs were 10 per cent lower compared with last year. Fuel remained the largest outlay, accounting for 24 per cent of operating costs compared with 28 per cent last year.
Capacity measured in available seat kilometres grew by 12 per cent, while passenger traffic carried, measured in revenue passenger kilometres, was up by 8 per cent, with average passenger seat factor dropping to 75.3 per cent, compared with last year’s 78.3 per cent. Emirates carried 28 million passengers in the half year, up 9 per cent. The volume of cargo remained stable at 1.3 million tonnes, “a solid performance in a challenging air freight market”, it said.
“Our past investments in product and services are now paying off, enabling us to retain valued clients and attract new customers – reflected in the airline’s passenger growth of 2.3 million. We continue to make strategic investments, because we know we have to work even harder for every customer, and make every dollar spent go even further through innovation and driving efficiency across our business,” Sheikh Ahmed said.
The cash position was Dh14.9bn at the period end, compared with Dh23.5bn six months earlier because of continuing investments, mainly in new aircraft and repayments of bonds totalling Dh4.1bn, loans and lease liabilities.
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