Emirates Group, the biggest long-haul airline, has remained profitable amid lower oil prices that undermined the growth of Persian economies and terrorist attacks discouraged people from traveling.
“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,” said His Highness (H.H.) Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group
For the year ended 30 March 2017, the Emirate Group’s net income dropped 70 to 2.5 billion dirhams ($670 million) while sales increased by 2 percent to 94.7 billion dirham ($25.8 billion).
The current business environment hindered the Dubai based company from paying dividend to shareholders as it seeks to conserve cash to support its future expansion plans.
The company has been grappling with a sharp fall in travel demand that was caused by the Brexist vote to leave the Europe and a spate of terrorists attack in the Middle East.
President Donald Trump’s immigration policies in the United States to a weak naira and funds repatriation issues in parts of Africa, the continued knock on effect of a sluggish oil and gas industry, disrupted the travel industry.
In spite of the harsh operating environment, the Dubai based company has embarked on projects that will help lift revenue and bolster profit.
In 2016-17, the Group collectively invested 13.7 billion dirham ($ 3.7 billion) in new aircraft and equipment, the acquisition of companies, modern facilities, the 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,” said Sheikh Ahmed.
Against significant currency devaluations against the US dollar and fare adjustments due to a highly competitive business environment, Emirates managed to keep its revenue stable at AED 85.1 billion ($ 23.2 billion).
Earnings At the group’s airline operating costs were up 8 percent over the 2015-16 financial years.
The average price of jet fuel fell slightly during the financial year. But due to an 8 percent higher uplift in line with capacity increase, the airline’s fuel bill increased by 6 percent over last year to AED 21.0 billion $ 5.7 billion).
Fuel is now 25 percent of operating costs, compared to 26 percent in 2015-16, but it remained the biggest cost component for the airline.
In an airfreight market that remained challenging with fast-changing demand patterns, Emirates’ cargo division reported a revenue of 10.6 billion dirham ($ 2.9 billion), a decline of 5 percent over last year, while tonnage carried slightly increased by 3 percent to reach 2.6 million tonnes.
“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.
“Emirates and dnata will stay attuned to the events and trends that impact our business, so that we can respond quickly to opportunities and challenges. We will also progress on our digital transformation journey. We are redesigning every aspect of how we do business, powered by an entirely new suite of technologies. Our aim is to deliver more personalised customer experiences, and seamless customer journeys, and make our operations and back-office functions even more efficient.”
Ifeoma Okeke
