Emirates Airline posts $964m profit and shrugs off recession
Posted on 12 May 2010 with no comments from readers
Emirates Airline has posted a spectacular recovery in profits from $187 million to $964 million in the year to the end of March thanks to lower fuel costs and more flights, on average 78 per cent full.
A year ago results suffered from the triple whammy of high fuel prices, the global financial crisis and the Dubai property crash. This year the airline has raised its ticket prices adding to the bottom line.
Exceptional year
‘It has been an exceptional year of continued profitability against a backdrop of the worst global recession in generations,’ said Chairman Sheikh Ahmed bin Saeed Al Maktoum. ‘We continue to grow, not through protectionism but through competition.’
The Emirates fleet and destination map has been growing apace as planes ordered in the early 2000s continue to arrive. The airline is the biggest customer for the Airbus A380, and has 145 aircraft costing over $48 billion on order. There will be seven more A380s delivered this year.
In its last financial year the airline boosted passenger numbers by 21 per cent to 27.5 million and cargo was up 12 per cent to 1.6 million tonnes. The group has cash balances of $3.4 billion and earned total revenues of $12.4 billion.
The airline also benefited from a 25 per cent increase in air traffic in the Middle East in the first quarter, according to the International Air Transport Association. Dubai was in a recession last year but relatively high oil prices have kept the rest of the region expanding through the global downturn.
Flying high
The prospects for profits going forward hinge on a continuation of this growth path. A double dip recession in major economies would threaten another downturn in profits on the pattern of a year ago.
However, the Emirates’ business model is robust. The new A380s are among the most profitable aircraft in the air. Emirates’ young and cheerful crew policy keeps costs down and passengers like it. The legacy airlines are the ones that need to worry.
The group has just ended a recruitment freeze and will hire 5,000 staff in the next year, a 10 per cent increase in its current staff level of almost 50,000.
The benefit to the Dubai economy, where tourism is now the biggest earner after the demise of real estate and construction, is enormous and Emirates has to be understood as a big part of the Dubai success story.
