Emirates Group reports record $1.6bn profit
Dubai, May 10, 2011
The Dubai-based Emirates Group today reported a record net profit of Dh5.9 billion ($1.6 billion) for 2010-11, despite a challenging business climate.
The 2010-11 annual report of the Emirates Group - comprising Emirates Airline, dnata and their subsidiary companies – was released in Dubai today at a news conference hosted by Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group.
“This year’s record results represent our drive to push the boundaries of aviation, questioning the norms and advocating for open and fair competition. Despite unforeseen challenges in the form of political instability and shocking natural disasters we have managed, through sheer determination, nimbleness and quick thinking, to produce our best ever result,” said Sheikh Ahmed.
In the face of many challenges, both political and environmental, the group’s revenue increased by 26.4 per cent reaching a remarkable new level at Dh57.4 billion ($15.6 billion). Strong revenue has been the main driver for the group’s record financial performance. The group’s cash balance rose substantially to hit a record high at Dh16 billion ($4.4 billion).
The group’s exceptional performance this year owes much to its dexterity and ability to adapt to changing market conditions quickly, Sheikh Ahmed said. In the first six months Emirates was able to capitalise on strong market demand thanks to its superior network and world-class product, he said.
'With political instability across parts of the world coming to the fore in the second half of the year, Emirates was able to swiftly adjust flight schedules, redeploying aircraft to balance the network and optimise revenue. The airline’s notable ability to drive revenue, in the midst of an unstable business environment enabled it to partially shield itself against a dramatic increase in fuel prices in the second half of the year,' he said.
During the year, dnata forged forward with its international expansion through its proven strategy of acquisition, taking ownership of Alpha Flight Group, a leading caterer with operations in 61 airports globally. Dnata has now become the world’s fourth largest air services provider.
“A clear indication of our strength, this year’s financial result represents the tireless work of our 57,000 strong workforce. Operating without subsidy and through a well thought out business model we have, as a team, been able to confront adversity on many levels,” added Sheikh Ahmed.
“Emirates continues to dismiss the perceived limitations of the aviation industry, advocating for an open skies environment that stimulates competition, an undeniable positive for the customer. The customer is at the heart of our operations, evident in the 31.4 million passengers that flew with us throughout the financial year, an increase of 14.5 percent or 4 million passengers on last year,” he said.
On course with its financial commitments, a net amount of Dh1.8 billion ($500 million) was used to repay a bond that matured on March 24. The bond, listed on the Luxembourg Stock Exchange, was originally issued in 2004 with a seven-year term.
“Looking ahead we have no plans to deviate from our proven strategy of investing in our business and focusing on core customer service. As we continue to grow, we are ambitious enough to believe that we can stimulate change in the aero political arena, for the benefit of the industry and the customers that it serves,” said Sheikh Ahmed.
Emirates Airline’s revenues grew by an outstanding 25 percent from last year to reach Dh54.4 billion ($14.8 billion). Airline profits of Dh5.4 billion ($1.5 billion) marked an increase of 51.9 percent over 2009-10’s profits of Dh3.5 billion ($964 million).
Passenger Seat Factor, at 80.0 per cent, indicates the airline’s highest ever.
Operating costs, at Dh48.9 billion ($13.3 billion), were 22.7 percent higher than the 2009-10 financial year. This increase correlates with the rise in fuel prices and increased activity levels in addition to an overall growth in staff numbers and a rise in direct operating costs such as handling, in-flight costs and aircraft maintenance.
A sharp increase of 41.2 percent in the cost of fuel during 2010-11 at Dh16.8 billion ($4.6 billion), accounted for a sizeable 34.4 per cent of the airline’s total operating costs, close to the record highs witnessed in 2008-09. This increase is a direct result of the 26.5 percent hike in average fuel costs per US gallon, as well as higher overall consumption due to increased capacity.
Passenger yield increased by 8.5 percent to 28.3 fils per RPKM (Revenue Passenger Kilometre), up from 26.1 fils (7 US cents) in 2009-10.
During the year, in line with the airlines strategic growth plan, Emirates significantly increased its order for new aircraft, adding 32 additional Airbus A380s and 30 Boeing 777-300ERs. The combined value of these orders is $13.4 billion and brings the airline’s total number of aircraft on order at the end of the financial year to 193, worth over $66 billion, said Sheikh Ahmed.
Emirates took delivery of eight new aircraft during the year including one Boeing 777-300ER and seven of the airline’s flagship A380s expanding the airline’s fleet size to 148 aircraft. Emirates remains the world’s largest A380 and Boeing 777 operator with 15 A380s and 86 Boeing 777s.
The airline launched passenger services to six new destinations – Amsterdam, Prague, Al Medinah al Munawarah, Madrid, Dakar and Basra – as well as increasing frequency and capacity to a number of high-demand cities across multiple markets, most notably the US, Asia, Middle East and Africa.
Emirates SkyCargo saw a strong increase in revenue up 27.6 per cent to a record Dh8.8 billion ($2.4 billion) thanks to a worldwide rebound in cargo traffic. Cargo tonnage increased by 11.8 per cent over the previous year to 1,767,000 tonnes. Additionally freight yield per FTKM (Freight Tonne Kilometre) increased by 11.3 per cent.
Cargo revenue contributed 17.4 percent to the airline’s total transport revenue, yet again one of the highest contributions of any airline in the world with a similar fleet.
Dnata’s revenue, driven by international expansion, crossed the Dh4 billion mark for the first time in its operating history reaching Dh4.4 billion ($1.2 billion) up 39.4 percent from last year. The substantial increase in revenue is primarily a result of increased revenues from airport operations and cargo handling business lines in addition to the acquisition of Alpha Flight Group in December 2010. - TradeArabia News Service