Emirates Airline has posted a return to profit growth and says it is well placed for future success amid an improving global economy and lift in cargo demand.
The Qantas alliance partner’s profit for the 12 months to March 31 2018 more than doubled to 2.8 billion Emirati dirham (A$1 billion), compared with 1.25 billion dirham (A$456 million) in the prior corresponding period.
Revenue at the airline rose 8.5 per cent to $92.3 billion dirham (A$33.7 billion), according to the Emirates Group annual report published on Wednesday in the United Arab Emirates (Emirates Group comprises the Emirates airline operation and air services provider dnata.)
Chairman and chief executive of Emirates Airline and Emirates Group Sheikh Ahmed bin Saeed Al Maktoum said there had been a “gradual recovery of economic activity” in key markets, helping support a strong uptick in cargo activity and, to a lesser extent, demand for air travel.
Despite the improvement, he said business conditions remained tough.
And although the recent rise in oil prices has lifted operating costs, it was also a sign of an expanding economy.
“For Emirates, surging oil prices in the second half of our financial year increased our operating costs,” Al Maktoum said in the company’s annual report.
“But it also stoked the embers of economic recovery which contributed to better seat load factors and a modest climb in yields.”
Total operating costs rose seven per cent, Emirates said, with the airline’s fuel bill increasing by 18 per cent.
Emirates has also benefitted from a closer partnership with regional carrier flydubai that was first announced in July 2017 and involves codesharing on each other’s networks and coordinating schedules to increase passenger choice.
From the end of March Emirates passengers have been able to access 92 additional destinations on the flydubai network. The two airlines are both owned by the Investment Corporation of Dubai (ICD), with Al Maktoum also chairman of flydubai.
“The partnership opened up new city-pair connections that did not exist previously, allowing both Emirates and flydubai to feed traffic into each other’s complementary networks, serving a bigger pool of customers in more cities to bring them immense value and choice, along with strengthening Dubai’s position as a global aviation hub,” Emirates said.
Emirates has also launched new cabin products such as upgraded first and business class seats for its 777 fleet.
The annual report said Emirates carried 58.5 million passengers in fiscal 2018, up 4.3 per cent from 56.1 million in the prior year. Average load factors rose 2.4 percentage points to 77.5 per cent.
During the year, the airline’s fleet rose by nine to 268 aircraft, comprising 102 Airbus A380s, 153 Boeing 777s, and 13 Boeing 777 freighters. There were 17 additions to the fleet and eight were withdrawn.
Emirates has orders for 40 Boeing 787-10s due for delivery from 2022 onwards. It also has put pen to paper for 16 A380s, to arrive from 2020 onwards, along with options for 20 more of the type.
The number of employees at the airline was cut by 3.7 per cent to 62,356.
“While expanding our business and growing revenues, we also tightened our cost discipline,” Al Maktoum said.
“Across the Group, we progressed our initiatives to rebuild and streamline our back office operations with new technology, systems and processes. This year, our reduced recruitment activity, coupled with restructured ways of working gave us gains in productivity, and a slowdown in manpower cost increases.”
It has been reported Emirates has been putting a number of aircraft in storage and reducing its flight schedule due to a some pilot and cabin crew shortages.
dnata profit highest ever
Meanwhile, dnata posted a 8.8 per cent improvement in profit to 1.2 billion dirham. Emirates Group said it was the highest profit in the company’s 59-year history.
dnata has four key businesses, UAE airport operations, international airport operations, catering and travel services.
“The strong performance was achieved through organic growth with key contract wins coupled with solid customer retention across its four business divisions, as well as the impact of acquisitions from previous year,” Emirates said.
In April, it was announced dnata had agreed to purchase Qantas’s catering businesses Q Catering and frozen food maker Snap Fresh for an undisclosed sum.
The transaction requires Australian Competition and Consumer Commission (ACCC) approval.
Overall, the Emirates Group reported a 67.2 per cent lift in profit to 4.1 billion dirham. It was the group’s 30th consecutive year of profit.
“Emirates and dnata have always responded to the immediate challenges of each business cycle with agility, while not losing sight of the future,” Al Maktoum said.
“We are ready to meet the opportunities and remain on course for future success.”