Profits crash 88% at Emirates in first-half to $77m

High oil prices sent Emirates Airline’s net profit into a tailspin in the first half of its financial year with a fall of 88 per cent to $77 million. But at least the largest Middle East carrier stayed in the black.

‘The first half of the year has been very tough for the airline industry, with record fuel prices forcing many carriers to shut shops or consolidate,’ chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement. ‘Emirates has worked hard to manage the impact of high fuel prices on our unit costs, while continuing to grow our business.’

Fuel costs came in higher than budgeted by $469 million. This will clearly be a blow to full-year profits. In the last full year to March 31, Emirates reported a 62 per cent surge in net profit to $1.37 billion. The airline now has 121 aircraft, including two of the new superjumbo Airbus A380s.

Terminal three

Emirates is currently in a massive expansion phase, with a huge order book of aircraft. Its dedicated new $4.5 billion Terminal Three at Dubai International Airport opened last month, with a total lack of problems as this correspondent can testify from experience last weekend. Even the self-service baggage check-in actually works.

The cost of aviation fuel has plummeted over the past month and so the impact of high fuel costs is temporary. However, the global financial crisis is now hitting premium class travel and starting to impact total passenger numbers.

The timing is not good for an expanding carrier but the Gulf market is somewhat isolated from the global financial crisis, and Emirates has strong brand loyalty to call upon.
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