Dubai’s Emirates reports 111% increase in first half profit

Dubai airline Emirates recorded a dramatic increase in profitability in the first half of its fiscal year thanks to cost saving measures including job cuts and a more favourable currency situation.

The airline’s net profit rose from Dhs786m ($214m) in the April 1 to September 30 period in 2016 to Dhs1.7bn ($452m) this year driven by “improved seat load factors, tight control on capacity deployment and the strengthening of currencies in Emirates’ key markets against the US dollar”.

Read: Dubai airline Emirates H1 net profit slumps 75%

The wider Emirates Group, including the airline, also cut 3 per cent of its workforce during the period, with headcount reducing from 105,746 to 102,669.

“This was largely a result of natural attrition together with a slower pace of recruitment, as various parts of the business adopted new technologies, streamlined business processes and re-allocated resources,” the group said.

Emirates carried 29.2 million passengers between April 1 and September 30 2017, up 4 per cent from the same period last year.

Capacity in available seat kilometres was up 3 per cent and revenue passenger kilometres increased 5 per cent. Average passenger seat factor rose from 75.3 per cent to 77.2 per cent.

The airline also carried 5 per cent more cargo to 1.3 million tonnes and yield improved 8 per cent.

Revenue including other operating income was up 6 per cent from Dhs41.9bn ($11.4bn) to Dhs44.5bn ($12.1bn).

“Given the earlier impact of the [US] travel ban, which was followed up by the electronics ban and a backdrop of increased competition that had slashed both yield and profit margin, Emirates’ results show the fruits of a turnaround plan that involves leveraging the strength of its network and brand alongside smaller family member, flydubai,” said Saj Ahmad, chief analyst at StrategicAero Research.

Operating costs were up 4 per cent, with fuel remaining the largest factor following an 11 per cent increase in oil prices compared to the same period last year. Fuel accounted for 26 per cent of operating costs compared to 24 per cent in the first half of 2016.

Emirates said it received four Airbus A380s and six Boeing 777s during the first half with nine other deliveries scheduled before the end of the financial year. It also retired five older aircraft and will retire a further four by March 31.

“Behind the scenes, the steady rise of fuel, offset only by its homogenous A380 and 777 fleets, delivering better economies of scale, the pressure on yields has meant that Emirates is still facing wider competitive pressures as the impact of regional capacity increases and the chase for the same traffic ebbs away at fares and makes profitability harder to attain and sustain,” Ahmad added.

One major announcement during the period was a tie up with low cost sister carrier Flydubai to improve returns for their shareholder the Dubai government.

Dozens of codeshare routes have already been announced and the two may eventually operate from Emirates’ Terminal 3 at Dubai International.

Read: Emirates, flydubai announce new codeshare routes

In the wider Emirates Group, profit was up 77 per cent to Dhs2.3bn ($631m) and revenue increased 6 per cent to Dhs49.4bn ($13.5bn).

“Our margins continue to face strong downward pressure from increased competition, oil prices have risen, and we still face weak economic and uncertain political realities in many parts of the world,” said HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO of Emirates Airline and group.

“The easing of the strong US dollar against other major currencies helped our profitability. We are also seeing the benefit from various initiatives across the company to enhance our capability and efficiency with new technologies and new ways of working. Moving forward, we will continue to keep a careful eye on costs while investing to grow our business and provide our customers.”

Profit at air services and travel company dnata was up 20 per cent to Dhs659m ($180m) and revenue increased 7 per cent to Dhs6.3bn ($1.7bn).