Dubai’s Emirates Group reports highest-ever annual profit of Dhs10.9bn for FY2022-23

The Emirates Group has released its 2022-23 Annual Report, reporting its most profitable year ever on the back of strong demand across its businesses.

The group announced its annual profit touched Dhs10.9bn ($3bn), a significant turnaround from last year where it made a Dhs3.9bn ($1.1bn) loss.

Group revenue earned was Dhs119.8bn ($32.6bn), marking an increase of 81 per cent with strong customer demand worldwide with almost all travel restrictions removed. The group ended the year with highest-ever cash balance of Dhs42.5bn ($11.6bn).

The group declared a dividend of Dhs4.5bn ($1.2bn) to its owner ICD, Investment Corporation of Dubai. It repaid Dhs3bn ($817m) of debt raised during the Covid-19 crisis, partly ahead of maturity.

Both Emirates and dnata saw significant revenue increases in 2022-23, as the group expanded its air transport and travel-related operations following the removal of nearly all pandemic-related restrictions around the world.

Emirates reported its most profitable year ever with a profit of Dhs10.6bn ($2.9bn) compared with Dhs3.9bn ($1.1bn) loss in the previous year. Revenue was up 81 per cent to Dhs107.4bn ($29.3bn), as the airline restored its global network and reinstated more passenger flights. Airline capacity increased by 32 per cent to 48.2 billion ATKMs, with two new 777 freighter aircraft added to its fleet.

dnata reported a profit of Dhs331m ($90m), robust growth from its Dhs110m ($30m) profit last year.

It reported that revenue increased by 74 per cent to Dhs14.9bn ($4.1bn), reflecting the ongoing pandemic recovery across all business divisions in the UAE and worldwide.

The aviation services provider expanded its global footprint with launch of operations in Zanzibar, Tanzania; new cargo operations in Germany and Canada, and acquiring full ownership of ground handling operations in Brazil.

Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group, said: “We’re proud of our 2022-23 performance which is not only a full recovery, but also a record result.

“I’m proud of the Emirates Group’s performance for 2022-23, and our contribution to the restoration of air transport and tourism across the markets we serve, including Dubai’s astounding 97 per cent year-on-year growth in international visitors for 2022. The group is the biggest player in the UAE’s aviation sector, which supports over 770,000 jobs and generates an estimated contribution to GDP of over $47bn. With our growth plans, and in line with the Dubai Economic Agenda D33, we expect to significantly increase our contribution to the UAE’s GDP over the next decade through direct and indirect employment, supply chain spending, tourism spend, and trade and commerce benefits from the movement of cargo.”

Sheikh Ahmed added: “We had anticipated the strong return of travel, and as the last travel restrictions lifted and triggered a tide of demand, we were ready to expand our operations quickly and safely to serve our customers. Our ongoing investments in our brand, and in our products and services, helped drive customer preference and position us favourably in the market. As a result, we have delivered a record financial performance and cash balance for our financial year 2022-23.  This reflects the strength of our proven business model, our careful forward planning, the hard work of all our employees, and our solid partnerships across the aviation and travel ecosystem.”

Emirates Group ramps up activity

To support expanded operations and to bolster the group’s future capabilities, Emirates and dnata ramped up recruitment activity across the globe during the year. As a result, the group’s total workforce increased by 20 per cent to 102,379 employees, representing over 160 different nationalities.

In 2022-23, the group collectively invested Dhs7.2bn ($2bn) in new aircraft, facilities, equipment, companies, and the latest technologies to position the business for future growth. Other milestones included  commitments included a massive multi-billion dollar aircraft cabin retrofit programme; an order for five new 777 freighters; the building of a new pilot training centre; the opening of Bustanica, the world’s largest vertical farm in Dubai under a partnership with CropOne; new training aircraft for its cadets at Emirates Flight Training Academy; dnata’s acquisition of 30 per cent shares to gain full ownership of its ground handling operations in Brazil; and the building of a new advanced cargo facility in Erbil, Iraq.

BREAKING NEWS: The Emirates Group has just reported its most successful year ever, with an annual profit of US$ 3.0 billion in 2022-23. https://t.co/iL4Ts9g9fq pic.twitter.com/dqXTp28vHq

— Emirates (@emirates) May 11, 2023

The Emirates Group also continued to progress on its sustainability journey during the year. Notably, it signed up to the United Nations Global Compact, a voluntary initiative where Emirates and dnata will work towards making the UN Sustainable Development Goals (SDGs) and Principles part of their strategy, culture, and operations. The group also signed the UAE Gender Balance Council’s pledge to increase female representation at mid-senior management positions to 30 performance across the country by 2025.

Amongst its numerous environmental initiatives, a key highlight for Emirates was the successful conduct of a demonstration flight with 100% sustainable aviation fuel (SAF) in one engine of a Boeing 777. This first-in-region initiative contributes to collective industry data and efforts to enable a future of 100 per cent SAF flying. dnata in 2022-23 pledged to invest $100m (Dhs367m) over two years, to improve environmental efficiency across its global business, supporting its goal to reduce its carbon footprint by 50 per cent by 2030.

Emirates performance highlights

• Total passenger and cargo capacity increased by 32 per cent to 48.2 billion ATKMs in 2022-23.
• In addition to launching services to Tel Aviv, Emirates relaunched flights to six destinations and increased operations to 62 cities across its network throughout the year to serve strong customer demand. By March 31, the Emirates network comprised 150 destinations across six continents, including 9 cities served by its freighter fleet only.
• Emirates also deployed its flagship A380 aircraft to even more cities during the year, bringing its A380 network to 43 destinations as of March 31.
• Enabling its customers access even more destinations, Emirates signed agreements with new codeshare partners in 2022-23 most notably with United Airlines and Air Canada, expanding the airline’s connectivity in the Americas to over 200 new points, in addition to mutual frequent flyer programme benefits. Emirates also reinforced its strategic partnerships with Qantas and flydubai and added new interline and codeshare partners: Airlink, AEGEAN, ITA Airways, Air Tanzania, Bamboo Airways, Batik Air, Philippine Airlines, Royal Air Maroc and Sky Express.
• Emirates received two new 777 freighter aircraft during the financial year. It also phased out four older aircraft comprising two A380, one Boeing 777-300ERs and one freighter. Its total fleet count at the end of March was 260 units, with a youthful average fleet age of 9.1 years.
• Emirates’ order book stands at 200 aircraft, including five additional Boeing 777-300ER freighter orders announced during 2022-23.
• Currency fluctuations in some of the airline’s major markets, notably the Euro, Pound Sterling, and devaluation of the Pakistani Rupee, significantly impacted the airline’s profitability negatively by Dhs4.5bn ($1.2bn).
• Total operating costs increased by 57 per cent from last financial year. Cost of ownership (depreciation and amortisation) and fuel cost were the two biggest cost components for the airline in 2022-23, followed by employee cost.
• Fuel accounted for 36 per cent of operating costs compared to 23 per cent in 2021-22. The airline’s fuel bill increased by 143 per cent to Dhs33.7bn ($9.2bn) compared to the previous year, due to a higher uplift of 49 per cent in line with capacity expansion and a higher average fuel price which was up by 48 per cent.
• The airline carried 43.6 million passengers (up 123 per cent) in 2022-23, with seat capacity up by 78 per cent. The airline reported a passenger seat factor of 79.5 per cent, compared with last year’s passenger seat factor of 58.6 per cent; and a 7 per cent increase in passenger yield to 37.5 fils (10.2 US cents) per revenue passenger kilometre (RPKM), due to a change in cabin and route mix, fares and currency.
• During the year, it launched its full ‘Premium Economy’ experience to hugely positive customer feedback, brought into service the first 6 of its newly retrofitted A380s with completely refreshed cabin interiors, and opened ‘Emirates World’ – a modern concept retail store which will gradually be introduced to other key markets.
• It also announced a $350m investment in new generation inflight entertainment systems for its A350 fleet.
• The carrier signed a landmark biometric data agreement with the General Directorate of Residency and Foreigners Affairs in Dubai to fast-track travellers’ journey on arrival.
• Emirates SkyCargo maintained its edge in the global airfreight industry by focusing its customers, bringing innovative solutions to the market, and leveraging its fleet and network capabilities. During the year, the cargo division signed commercial MoUs with United Airlines and Air Canada to expand its network reach and capacity for customers; introduced a new digital channel, WebCargo, for customers to directly access and book its flights for their cargo shipments; and launched Emirates Delivers UK, expanding its e-commerce shipping solution to UAE customers.
• Emirates SkyCargo also deployed its expertise and capacity to transport relief goods to Pakistan, Turkey and Syria in partnership with Dubai’s International Humanitarian City.
• With steady air freight demand throughout the year, Emirates’ cargo division reported a solid revenue of Dhs17.2bn ($4.7bn). This was a 21 per cent decline over last year’s exceptional performance caused by the pandemic.
• Freight yield per freight tonne kilometre (FTKM) increased by 3 per cent despite more cargo capacity returned to the global market, but generally remained at high levels compared to the pandemic marketplace due to steady and strong demand.
• Emirates’ hotels portfolio revenue over last year increased by 12 per cent to Dhs675m ($184m) reflecting the uptick in tourism traffic, particularly to Dubai.
• Emirates closed the financial year with an exceptional level of cash assets of Dhs37.4bn ($10.2bn), 79 per cent higher compared to March 31 2022.

dnata performance highlights

• In 2022-23, dnata increased its profit by 201 per cent to Dhs331m ($90m).
• dnata’s total revenue increased by 74 per cent to Dhs14.9bn ($4.1bn). dnata’s international businesses account for 72 per cent of its revenue, an increase of 10 percentage points from the previous year. Through the year, dnata worked closely with its customers through the challenges of labour shortages and rising inflation in its major markets such as UK, US, Europe and Australia.
• dnata’s investments in 2022-23 amounted to Dhs467m ($127m).
• In 2022-23, dnata’s operating costs increased by 74 per cent to  Dhs14.6bn ($4bn), in line with expanded operations in its Airport Operations, Catering and Travel divisions and impacted by inflationary pressure across all markets mainly for labour and food supply.
• dnata’s cash balance improved by more than Dhs200m to Dhs5.1bn ($1.4bn). Net cash used in financing activities, primarily payments for loans and leases, amounted to Dhs906m ($247m), while the business utilised net cash of Dhs528m ($144m) in essential investing activities. The business saw a positive operating cash flow of Dhs1.4bn ($381m) in 2022-23, a reflection of the substantial improvements in revenue.
• Revenue from dnata’s Airport Operations, including ground and cargo handling increased to Dhs7.2bn ($2bn).
• The number of aircraft turns handled by dnata globally grew by 35 per cent to 712,383, cargo handled declined by 8 per cent to 2.7 million tonnes, reflecting the increased flight activity across markets as the last pandemic restrictions lifted and dnata’s customers reinstated services.
• dnata’s Catering & Retail business accounted for Dhs4.8bn ($1.3bn) of dnata’s revenue, up by 187 per cent. The inflight catering business uplifted 111.4 million meals to airline customers, almost three times the number of meals from last year, as its airline customers across the world restored their flight operations.
• Revenue from dnata’s Travel Services division grew by 227 per cent to Dhs2.3bn ($618m). The reported total transaction value of travel services sold increased by 203 per cent to Dhs7bn ($1.9bn), a substantial growth from last year.

Photo: Emirates