Emirates airline reports 69% profit fall after a ‘tough’ year.
Dubai’s Emirates airline reported a 69 percent year-on-year decline in profit for the financial year ended March 31, 2019, as the carrier faced its biggest-ever fuel bill and the negative impact of the strengthening of the US dollar.
While Emirates saw revenues increase by 6 percent to AED97.9 billion ($26.7 billion), profits declined 69 percent year-on-year to AED871 million.
“2018-19 has been tough, and our performance was not as strong as we would have liked,” Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO of Emirates Airline and Group, said in a press statement issued on Thursday.
“In 2018-19, Emirates and dnata delivered our 31st consecutive year of profit, recorded growth across the business, and invested in initiatives and infrastructure that will secure our future success,” he added.
Operating costs for the airline increased 8 percent during the financial period. The rising oil prices meant the airline’s fuel bill increased by 25 percent over last year to AED30.8 billion, resulting in the airline’s biggest-ever fuel bill. Fuel accounted for 32 percent of Emirates’ operating costs, compared to 28 percent in 2017-18, and remained the airline’s biggest cost component.
Another key negative factor was the strengthening of the US dollar, which took a AED572 million bite out of the airline’s bottom line.
Emirates carried 58.6 million passengers during the period, an increase of 0.2 percent. While seat capacity increased 4 percent, an increase in fares resulted in a 3 percent rise in passenger yields.
In terms of geographies, no one region accounted for more than 30 percent of overall revenue. Europe was the biggest market, bringing in revenue of AED28.3 billion, a year-on-year increase of 6 percent.
Africa was the best growth market, with revenue up 9 percent to AED10.2 billion, while revenue in the Gulf and Middle East declined 3 percent to AED8.3 billion.
Overall, the Emirates Group, which consists of Emirates airlines and air services provider Dnata, posted a profit of AED2.3 billion over the period, a year-on-year decline of 44 percent, despite Group revenues increasing 7 percent to AED109.3 billion.
The group’s cash balance was AED22.2 billion, down 13 percent year-on-year, due to large investments into the business. A dividend of AED500 million has been promised to the Investment Corporation of Dubai, the emirate’s sovereign wealth fund and the Group’s parent company.
Air services provider Dnata recorded a profit of AED1.4 billion. This was its most profitable year ever, mainly due to a one-time gain from its divestment from its stake in the travel management company Hogg Robinson Group (HRG). When this is taken out, on a like-for-like basis, dnata recorded a year-on-year decline in profit of 15 percent.
Dnata’s total revenue grew 10 percent to AED14.4 billion, with its international business accounting for 70 percent of revenue.