Emirates H1 profit surges as revenue falls 13 per cent
Posted on 05 November 2009 with no comments from readers
Dubai flag carrier Emirates has reported a 165 per cent surge in profits from $77 million to $205 million in the six months to the end of September thanks largely to lower fuel prices.
But lower numbers of passengers and falling cargo loads meant that revenues fell by 13 per cent to $5.4 billion, and the company said it could take one or two years to claw back this lost business.
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The airline has kept on an expansion routing with capacity in available seat kilometers up 22 per cent. With all that new capacity the carrier did well to limit its passenger seat factor decline to 1.3 per cent to 77 per cent.
‘While some say the green shoots of economy recovery are sprouting, we expect it will take at least another year or two, before demand for air transport and travel services starts picking up again,’ commented chairman and CEO Sheikh Ahmed bin Saeed Al Maktoum. ‘In the meantime, Emirates is well-placed to weather the rest of the storm.’
Emirates has expanded its fleet to 139 wide-bodied aircraft and has 10 more planes scheduled for delivery by the end of March. Cash at the end of September stood at $1.8 billion against $2 billion six months before. The airline said that cost cuts and lower fuels prices helped a 16 per cent decline in total costs of $5.2 billion.
Again Emirates is bound to be the envy of its rivals with these results. This autumn there are tentative signs of a pick up in tourist numbers in Dubai, although business visitors numbers are down and trade show attendance is suffering.
Double-dip recession
However, going forward Emirates is at the mercy of global market forces, and a double-dip recession would challenge the airline’s expansion plans. On the other hand, other airlines are finding it harder to cope and a renewed recession would likely result in some significant failures.
Emirates cost structure remains the secret of its success, and will continue to keep this airline moving forward at a time when the future of many carriers is imperiled.
The airline also stands as a proxy for the Dubai economy, and there its message is not so reassuring. If raising capacity is resulting in falling revenues then this is not healthy, and relying on cutting costs to keep profits up may only work in the short term.
