Thursday, May 11, 2017

Emirates Group posts $680.4m profit

The Emirates Group posted an Dh2.5 billion ($680.4 million) profit for the financial year ending 31 March 2017, down 70 per cent from last year’s record profit.

The group’s revenue reached Dh94.7 billion ($25.7 billion), an increase of 2 per cent over last year’s results, and the group’s cash balance decreased by 19 per cent to Dh19.1 billion ($5.1 billion) mainly due to the repayment of two bonds on maturity and ongoing high investments into its fleet and aircraft related assets.

In line with the current business climate and to support the future investment plans of the Group, no dividend payment will be made to the Investment Corporation of Dubai (ICD) for 2016-17.

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group, said: “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."

In 2016-17, the group collectively invested Dh13.7 billion ($3.7 billion) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and staff initiatives.

Sheikh Ahmed said: “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.

“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."

Across its more than 80 subsidiaries and companies, the group increased its total workforce by 11 per cent to over 105,000-strong, representing over 160 different nationalities.

Emirates performance

Emirates’ total passenger and cargo capacity crossed the 60 billion mark, to 60.5 billion available tonne km (ATKM) at the end of 2016-17, cementing its position as the world’s largest international carrier. The airline increased capacity during the year by 4.1 billion ATKMs, or 7 per cent over 2015-16.

Emirates received 35 new aircraft, its highest number during a financial year, comprising of 19 A380s and 16 Boeing 777-300ERs. At the same time 27 older aircraft were phased out, bringing its total fleet count to 259 at the end of March. This fleet roll-over involving 62 aircraft was the largest programme it has ever managed in a year, and it brought Emirates’ average fleet age down significantly to 63 months, compared with 74 months last year, and the industry average of 140 months.

During the year, Emirates launched six new passenger destinations: Fort Lauderdale, Hanoi, Newark, Yangon, Yinchuan and Zhengzhou; and one new additional freighter destination: Phnom Penh. It also added services and capacity to nine cities on its existing route network across Africa, Asia, Europe, the Middle East, and North America, offering customers even greater choice and connectivity.

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 Dh85.1 billion (23.1 billion). The relentless rise of the US dollar against currencies in most of Emirates’ key markets had a Dh2.1 billion ($571.6 million) impact on airline revenue, and to the airline’s bottom line. It was the 2nd largest measured in a financial year after last year.

Total operating costs increased by 8 per cent over the 2015-16 financial year. The average price of jet fuel fell slightly during the financial year. But due to an 8 per cent higher uplift in line with capacity increase, the airline’s fuel bill increased by 6 per cent over last year to Dh 21.0 billion ($5.7 billion). Fuel is now 25 per cent of operating costs, compared to 26 per cent in 2015-16, but it remained the biggest cost component for the airline.

The airline successfully managed increased competitive pressure across all markets to remain profitable with Dh1.3 billion ($353.8 million), a decrease of 82 per cent over last year’s record results, and a profit margin of 1.5 per cent.

Overall passenger traffic growth continues to demonstrate the consumer desire to fly on Emirates’ state-of-the-art aircraft, and via efficient routings through its Dubai hub.

Emirates carried a record 56.1 million passengers (up 8 per cent), and achieved a Passenger Seat Factor of 75.1 per cent. The decline in passenger seat factor compared to last year’s 76.5 per cent, is relative to the strong 10 per cent increase in seat capacity by available seat kilometres (ASKM), and also in part due to lingering economic uncertainty and strong competition in many markets.

Under pressure from the weakening of all major currencies against the USD, passenger yield dropped to 24.7 fils (6.7 US cents) per Revenue Passenger Kilometre (RPKM).

To fund its fleet growth in a year of record aircraft deliveries, Emirates raised Dh29.1 billion ($7.9 billion), using a variety of financing structures.

Emirates closed the financial year with a healthy Dh15.7 billion ($4.2 billion) of cash assets.  

Emirates continued to invest in refreshing its product and services in line with changing customer needs. The airline revealed its enhanced A380 Onboard Lounge which will enter service in July 2017, and announced a significant, multi-million dollar deal with Thales to equip its future Boeing 777X fleet with Thales’ Avant inflight entertainment system.

Other key initiatives in 2016-17 include: a $11 million makeover of its Business Class Lounge at Concourse B in Dubai International Airport; the opening of a new Emirates Lounge in Cape Town, and the introduction of new onboard amenities for passengers in all classes, including sustainable blankets in Economy Class made from 100 per cent recycled plastic bottles and using ecoThread patented technology.

For 2017-18, Emirates has announced new routes to Phnom Penh in Cambodia and Zagreb in Croatia, aside from capacity upgrades to existing destinations.

Emirates SkyCargo continues to play an integral role in the company’s expanding operations, contributing 13 per cent of the airline’s total transport revenue.

In an airfreight market that remained challenging with fast-changing demand patterns, Emirates’ cargo division reported a revenue of Dh10.6 billion ($2.8 billion), a decline of 5 per cent over last year, while tonnage carried slightly increased by 3 per cent to reach 2.6 million tonnes.

This year, freight yield per Freight Tonne Kilometre (FTKM) decreased by 8 per cent, reflecting the strong downward trend across the industry, and the weakening of major currencies against the US dollar.

Emirates’ hotels recorded revenue of Dh738 million ($200.8 million), an increase of 5 per cent over last year in a highly competitive market mainly in the UAE.

dnata performance

In its 58 years of operation, 2016-17 has been dnata’s most profitable yet, crossing Dh1.2 billion ($326.6 million) profit for the first time. Building on its strong results in the previous year, dnata's revenue grew to Dh12.2 billion ($3.3 billion), up 15 per cent. Dnata’s international business now accounts for 66 per cent of its revenue.  

This substantial revenue increase was achieved through organic growth, and bolstered by its new acquisitions of dnata Aviation Services in the US in April 2016 and Air Dispatch in the Czech Republic in July 2016, in addition to an increase in its shareholding of Oman United Agencies Travel in Oman, and the full year impact of dnata Brazil acquired during the previous year.

Building on last year’s record levels of investment, dnata continued to lay the foundations for future growth by investing more than Dh1 billion ($272 million) into developing its people, facilities, technology and new acquisitions.

In 2016-17, dnata’s operating costs increased accordingly by 15 per cent to Dh11.0 billion ($2.9 billion), reflecting the impact of integrating the newly acquired companies mainly across its international airport operations.

Dnata’s cash balance remains very solid at Dh3.4 billion ($925.4 million) and close to last year’s record high. The business delivered a Dh1.3 billion ($353.8 million) cash flow from operating activities in 2016-17, which is similar to last year’s company record.

Revenue from dnata’s UAE Airport Operations, including aircraft and cargo handling increased by 6 per cent to reach Dh3.0 billion ($816.5 million). - TradeArabia News Service



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