DUBAI: Emirates Group, which operates the world’s biggest long-haul airline, posted a 44 percent decline in full-year profit, hurt by higher oil prices and currency fluctuations.
Net income shrank to 2.32 billion dirhams ($632 million) in the 12 months through March, while revenue increased 7 percent to 109.3 billion dirhams, the company said in a statement.
The average seat load factor, or passengers carried as a percentage of available seats, fell to 76.8 percent from 77.5 percent.
“2018-19 has been tough, and our performance was not as strong as we would have liked,” Chairman Sheikh Ahmed bin Saeed Al Maktoum said.
“Higher oil prices and the strengthened U.S. dollar eroded our earnings, even as competition intensified in our key markets.”
Key Numbers
Emirates Group cash balance falls 13 percent on to 22.2 billion dirhams on investments and payment of last year’s 2 billion-dirham dividend.
Emirates Group to pay a dividend of 500 million dirhams to Investment Corp. of Dubai for 2018-2019 financial yearEmirates airline profit falls 69 percent to 871 million dirhams.
Revenue rises 6 percent to 97.9 billion dirhamsDnata, the group’s services and ground-handling unit, posts record profit of 1.4 billion dirhams.Includes 321 million-dirham gain from one-time stake sale.
"The uptick in global airfreight demand from the previous year appears to have gone into reverse gear, and we also saw travel demand weaken, particularly in our region, impacting both dnata and Emirates,” Sheikh Ahmed said.
“It’s hard to predict the year ahead, but both Emirates and dnata are well positioned to navigate speed bumps, as well as to compete and succeed in the global marketplace”.
Key Insights
Emirates is reporting earnings in a state of transition. The state-owned carrier is close to completing a review of its network to identify profitable routes, while a decision to drop the A380 from its long-term plans is still fresh in the memory.
The price of oil is always a particularly sensitive subject for Emirates. Too high and rising fuel costs become difficult to manage, but low levels leave the Gulf carrier vulnerable to falling travel demand to its home market.
President Tim Clark said last week the airline’s sweet spot for oil is between $50 to $60 a barrel, compared with the current level of about $70. The price of crude has been on an upward path since late 2018.
Premium economy class will be introduced next year. The price of a seat is in the “high echelons of economy but well below business,” Clark said.- Bloomberg
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