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Emirates profits nosedive 82% on low oil prices and terror concerns
May 11, 2017, 1:09 pm
Dubai-based Emirates airline profits nosedived 82 percent to AED1.3 billion ($340m) for the 2016-2017 financial year ended March 31, as a “relentless rise” in the US dollar impacted revenues by AED2.1 billion ($572 million). Despite the profit drop, revenues remained stable at AED85.1bn ($23.2bn), as year-on-year passenger numbers grew 8 percent to 56.1 million.
Total operating costs increased by eight percent despite the average price of jet fuel falling. Fuel rose by 6 percent over the last year to AED21bn ($5.7bn). Fuel was 25 percent of operating costs, compared to 26 percent in 2015-16, but it remained the “biggest cost component for the airline”.
The Emirates Group -- of which the airline is a subsidiary -- posted profit of AED2.5bn ($670 million), down 70 percent from last year’s profit. The group’s revenue reached AED94.7bn ($25.8bn), an increase of two percent over last year.
The group’s cash balance fell by 19 percent to AED19.1bn ($5.2bn) due to the repayment of two bonds on maturity and ongoing high investments into its fleet and aircraft related assets. However, financial year 2016-17 remained the most profitable year for dnata in its 58 years of operation. Profit touched AED1.2bn ($330m) as revenue rose 15 percent to AED12.2bn ($3.3bn).
“Emirates and dnata have continued to deliver profits and grow the business, despite 2016-17 having been one of our most challenging years to date,” Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive officer, Emirates Airline and Group, said in a statement. In 2016-17, the group invested AED13.7bn ($3.7bn) in new aircraft and equipment, acquisition of companies, modern facilities, latest technologies, and staff initiatives.
“These investments will further strengthen our resilience, even as we extend our competitive edge, and adapt our businesses to the volatile business climate and fast changing consumer expectations,” Sheikh Ahmed said. “Over the years, we have invested to build our business capabilities and brand reputation," he said. "We now reap the benefits as these strong foundations have helped us to weather the destabilising events which have impacted travel demand during the year - from the Brexit vote to Europe’s immigration challenges and terror attacks, from the new policies impacting air travel into the US, to currency devaluation and funds repatriation issues in parts of Africa, and the continued knock-on effect of a sluggish oil and gas industry on business confidence and travel demand.”
Emirates funded its aircraft deliveries by raising AED29.1bn ($7.9bn), using a variety of financing structures, the statement said. The airline received 35 new aircraft, its highest number during a financial year, comprising 19 A380s and 16 Boeing 777-300ERs. At the same time, 27 older aircraft were phased out, bringing its total fleet count to 259 at the end of March.
This fleet roll-over involving 62 aircraft brought the average fleet age down significantly to 63 months, compared with 74 months last year, and the industry average of 140 months. Europe was the highest revenue contributing region with AED23.9bn ($6.5bn), remaining stable from 2015-16. East Asia and Australasia followed closely with AED22.6bn ($6.2bn), up one percent.
The Americas recorded revenue growth at AED12.4bn ($3.4bn), up three percent. Gulf and Middle East revenue rose by four percent to AED8.7bn ($2.4bn) while revenue for Africa declined by four percent to AED8.7bn ($2.4bn). West Asia and Indian Ocean revenue fell three percent to AED7.4bn ($2bn).
“We remain optimistic for the future of our industry, although we expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” Sheikh Ahmed said.
Source: Arabian Business
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