Emirates profit tumbles 70% on low oil prices, terror concerns

Valued partner: MAS said it had entered into a codeshare partnership with Emirates, giving MAS passengers access to 90 locations in the United States, Europe, the Middle East and Africa, served from Emirates

DUBAI: Emirates Group, operator of the world’s biggest long-haul airline, posted its first decline in annual profit for five years as the low oil price weighed on Persian Gulf economies and terrorist attacks discouraged people from travelling.

Net income for the 12 months ending March 31 tumbled 70% to 2.5 billion dirhams (US$681mil) as revenue grew 2% to 94.7 billion dirhams, Dubai-based Emirates said in a statement Thursday.

The earnings slump comes as Emirates grapples with some of the toughest operating conditions in a 30-year history that’s seen it become an industry heavyweight by exploiting the position of the Gulf at a natural global crossroads.

Adding to the carrier’s woes are a stronger dollar and a ban on in-cabin laptops on American flights that’s prompted it to rein in U.S. capacity.

“We expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” Chairman Sheikh Ahmed bin Saeed Al Maktoum said in the statement.

While the low price of crude has been a boon for most airlines, it represents a negative for Emirates and its Gulf peers, crimping demand for premium travel in a region at the center of world oil and gas production.

Terrorist attacks ranging from France to Turkey and North Africa have also put some people off travelling, with a significant slump in visits to Europe by Asian tourists.

President Donald Trump’s moves to limit U.S. access from countries including the United Arab Emirates, combined with a ban on in-flight access to large electronic devices, has seen planes that usually fly more than 80 percent full suffer a drop in occupancy, Emirates said last month.

That’s prompting the carrier to eliminate 25 weekly flights to the U.S. and redeploy aircraft to destinations in Malaysia, Oceania and Africa, according to President Tim Clark.

Emirates has also suffered from the strengthening of the U.S. dollar, which has reduced the value of receipts booked in a host of weaker currencies because of the dirham’s peg to the greenback. - Bloomberg