Emirates Airline saw its net profit nearly quadruple in the first half of its financial year, but warned that stiff competition would put pressure on the aviation industry in the second half.
The carrier reported 1H net income of AED862 million ($235 million), up 282% year-over-year (YOY) compared to AED226 million a year ago. Overall Emirates Group net income rose 8% to AED1.2 billion.
“This result was driven by increased agility in capacity deployment, with healthy customer demand for Emirates’ products driving improved seat load factors and better margins,” the group said Nov. 7.
Revenue for the period was down, however, declining 3% to AED47.3 billion at the airline and 2% to AED53.3 billion at the group. The lower revenue was primarily the result of planned capacity reductions during the 45-day southern runway closure at Dubai International Airport, and unfavorable currency movements in Europe, Australia, South Africa, India and Pakistan, the group said.
The coming months could also pose challenges, group CEO Sheikh Ahmed bin Saeed Al Maktoum said.
“The global outlook is difficult to predict, but we expect the airline and travel industry to continue facing headwinds over the next six months, with stiff competition adding downward pressure on margins,” he said.
The group’s profit increase was primarily attributed to a 9% decline in fuel prices, partially offset by the negative currency movements.
“The Emirates Group delivered a steady and positive performance in the first half of 2019-20 by adapting our strategies to navigate the tough trading conditions and social-political uncertainty in many markets around the world,” Al Maktoum said. “The lower fuel cost was a welcome respite as we saw our fuel bill drop by AED2 billion compared to the same period last year. However, unfavorable currency movements wiped off approximately AED1.2 billion from our profits.”
Operating costs declined 8% YOY, the company said, adding that on average, fuel costs were 13% lower, largely because of the price drop but also because of a lower fuel uplift as the runway closure reduced capacity.
Capacity was down 5% YOY and traffic declined 2%, resulting in a 2.3-point increase in load factor to 81.1%. Passenger yield rose 1%.
The airline carried 7.9% more passengers to its hub during the period.
Cargo volumes decreased 8% while yield declined 3%, reflecting “the tough business environment for air freight in the context of global trade tensions and unrest in some key cargo markets,” Emirates said.
During the first half, Emirates took delivery of three Airbus A380s, with three more aircraft scheduled to arrive by the end of the financial year.
The carrier retired six aircraft from its fleet, with two more to be returned by March 31, 2020. As of Sept. 30, Emirates had a fleet of 267 aircraft.
Source:ATW
