Adnan Kazim, Chief Commercial Officer at Emirates airline.
Kazim said pent-up demand for travel would weather higher inflation rates that are biting into consumer spending. Image Credit: Supplied

Dubai’s flag carrier Emirates expects to post strong profits in its May 2023 annual report, a top airline official has revealed.

While details of the earnings will be not be disclosed now, the airline’s Chief Commercial Officer Adnan Kazim said: “The initial indication looks positive and we are seeing the same strong six months that we have seen in terms of the results as we are progressing towards the last quarter of the financial year.” And as far as Emirates is concerned, passenger demand shows no signs of slowing down despite larger macroeconomic concerns such as inflation and fluctuating oil prices.

He said: “We have seen a very strong December (2022) in terms of (passenger) demand. The flights were almost full, reflecting positively on the visitor numbers to Dubai, where the Emirate’s Department of Economy and Tourism monthly report showed hotels in the city were showing 100 per cent occupancy, and tourist numbers were exceeding 21 million. And this shows where Dubai is standing in terms of point-to-point traffic.”

The Emirates Group announced a record half-year profit of Dh4.2 billion in November 2022 after recording a loss of Dh5.7 billion in 2021. The group’s revenue was up 128 per cent to Dh56.3 billion. Kazim sat down with Gulf News for a free-wheeling conversation to discuss the airline’s 2023 forecast, re-building capacities, the success of its codeshare agreements, and the future of its massive fleet of Airbus A380 aircraft.

2023 demand forecast

Kazim said pent-up demand for travel would weather higher inflation rates that are biting into consumer spending. He noted that macroeconomic conditions such as high-interest rates, devaluation of currencies and fluctuating oil prices are increasing operational costs for the airline.

“We are seeing the effects of these factors eating into our ground handling and catering businesses. It is also impacting the aviation sector as a whole. But, passenger demand continues to remain strong, seat factors are also healthy, and most importantly, demand continues to exceed capacities compared to 2019 numbers. And this trend is being seen by many airlines,” he said.

That being said, Kazim also said Emirates is closely monitoring the volatile market conditions. “We are a dynamic airline, and we have gone through and overcome many such challenges and uncertainties in the past,” he said.

Kazim also said specific sectors of airline businesses are seeing a more robust recovery compared to pre-pandemic times. “The visit, friends and family (VFR) segment is performing well, and there is robust demand from families for all cabins, including the premium ones,” said Kazim.

Moreover, corporate business travel has returned to 80 per cent recovery from pre-pandemic times. The corporate slowdown was mainly driven by large economies, including China, being closed down. “Now that travel restrictions in China have been lifted, corporate business travel too will return to 100 per cent capacities,” said Kazim.

Ramping up capacities

Kazim said the airline’s success lies in deploying its parked Airbus A380s, updating extra capacities through codeshare agreements, and service expansions. “We are ramping up capacities, and we’re cooperating with other airlines (with codeshare agreements), and demand is shaping up positively towards the Emirate and its network,” the CCO stated.

The airline has bolstered its presence in the Asian, Australian, and European markets since January 2023 with service expansions to Brisbane, Bangkok, Taiwan, Tokyo-Haneda, Glasgow, and Birmingham. Moreover, Emirates has codeshare agreements with 26 airlines extending its reach to over 5,000 cities worldwide. However, it shares its most significant and valuable alliance with sister airline flydubai. “Our cooperation with flydubai is expanding day by day. Today, we fly to 130 destinations, and flydubai operates to 115 destinations. The combination of both gives us access to 225 destinations,” he said.

Kazim said: “We started 2023 with a very positive note in terms of demand and are continuing with our objective of ramping up capacity until the end of 2023. We aim to get back to our pre-pandemic numbers in overall capacities by deploying all our aircraft.”

Emirates, the world’s biggest operator of the Airbus A380, plans to return its entire fleet of 118 superjumbo aircraft to service by the end of the year. Currently, only 85 of Emirates’ A380 fleet are in operation. “All of our Boeing 777s have already been put back into service. But as we progress, we will deploy more of the A380s as we return to full pre-pandemic capacity by the end of the year,” he said. Emirates has 134 Boeing 777s in its fleet, and 115 777X are pending delivery.

What is the future of the A380?

Airbus, the manufacturer of the superjumbo jet A380, announced plans to halt its production in 12 years from 2021. However, for Emirates, the aircraft is core to its operational model. Amidst an ambitious retrofit programme where 120 planes will undergo a complete cabin re-fresh, including the installation of premium economy seats, Kazim said the ‘aircraft will not go away from the Emirates fleet any time soon’. “The A380 is core to what we’re doing in bringing volume to Dubai. We just received six aircraft from Airbus during the pandemic. Also, our passengers enjoy the product,” said Kazim.