Abu Dhabi: Emirates airline reported on Wednesday a 75 per cent year-on-year decline in profits to reach Dh786 million for the first half of 2016-2017 financial year ending in September 2016.
The airline said the decline followed one of Emirates’ best half-year performances in 2015, and attributed it to a stronger US dollar and a challenging operating environment. Emirates also said increased competition resulted in lower airfares, which impacted revenues.
Emirates’ revenues were almost flat, dropping one per cent year-on-year to reach Dh41.9 billion in the first half of the financial year.
“The airline was also impacted by currency devaluation and hard currency shortage in some African countries, as well as dampened travel demand due to the ongoing economic malaise and looming security concerns across major markets in its network,” a statement from the airline said.
Emirates’ operating costs rose 5 per cent against a capacity increase of 9 per cent. On average, fuel costs during the first half of the year were down 10 per cent year-on-year. Fuel remained the largest component of costs, however, accounting for 24 per cent of the airline’s operating costs compared with 28 per cent in the first six months of last year.
Meanwhile, Emirates Group, the company under which Emirates airline operates, reported a 64 per cent decline in profits to reach Dh1.3 billion for the first half of the 2016-2017 fiscal year.
Revenues were almost flat, rising one per cent to reach Dh46.5 billion.
“Our performance for the first half of the 2016-2017 financial year continues to be impacted by the strong US dollar against other major currencies. Increased competition, as well as the sustained economic and political uncertainty in many part of the world, has added downward pressure on prices as well as dampened travel demand,” said Shaikh Ahmad Bin Saeed Al Maktoum, chairman and chief executive of Emirates Airline and Group.
In a statement, he described a “bleak global economic outlook” as the new norm, saying that there is no immediate resolution in sight.
“Our past investments in product and services are now paying off, enabling us to retain valued clients and attract new customers — reflected in the airline’s passenger growth of 2.3 million,” the chairman and CEO said.
During the first half of 2016-2017 financial year, Emirates airline carried 28 million passengers, up nine per cent year-on-year. In terms of aircraft fleet, Emirates received 16 wide-body aircraft (8 Airbus A380s, and 8 Boeing 777s), with 20 more new aircraft scheduled to be delivered before the end of the financial year.
It also retired 19 older aircraft from its fleet with another 8 to be retired by March 31, 2017.
During the first half of the year, Emirates added new destinations to its network including Yinchuan, Zhengzhou, Yangon, and Hanoi. As of September 30, Emirates’ global network spanned 155 destinations in 82 countries.
Emirates Group’s cash position on September 30, 2016 dropped to Dh14.9 billion from Dh23.5 billion on March 31, 2016. This was due to investments into new aircraft, infrastructure projects, business acquisitions, and the repayment of bonds totalling Dh4.1 billion, loans and lease liabilities, the group said.
