Drop in oil prices boosts Emirates profit by 40%
AIRLINE POSTS DH88.8B REVENUE, A 7% RISE ON THE DH82.6B IT REPORTED A YEAR AGO
The fall in oil prices provided cost relief in the second half of our financial year, however, it did not offset the hit to our profitability caused by significant currency fluctuations.”
Shaikh Ahmad Bin Saeed Al Maktoum | President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group
Emirates airline reported yesterday a 40 per cent profit increase for the financial year ended March 31, that was partly bolstered by last year’s collapse in global oil prices.
Emirates made Dh4.6 billion ($1.2 billion) in profit for the 12 months ending March 31, 2015, compared to the Dh3.3 billion it made in the previous financial year, Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and Chief Executive of Emirates airline and Group, announced at Emirates headquarters.
The airline’s revenue for the period was Dh88.8 billion, a 7 per cent increase on the Dh82.6 billion it reported a year ago.
The financial year for Emirates Group, which includes the airline and ground handling and travel services company dnata, is from April 1 to March 31.
“The fall in oil prices provided cost relief in the second half of our financial year, however, it did not offset the hit to our profitability caused by significant currency fluctuations, nor the hit to our revenue from operational adjustments,” said Shaikh Ahmad.
He added that the drop in oil price saved the airline Dh2 billion. Oil prices started their decline last June from a high of around $115 a barrel for Brent crude, the global crude benchmark, and hit a low of $45 a barrel in January.
The airline’s fuel bill was Dh28.7 billion for the year and is still its largest single expense at 35 per cent of costs. Last fiscal year it accounted for 39 per cent of costs. Overall operating costs increased by 6 per cent, just under the 7 per cent increase in revenue.
Weak currencies
Weak currencies, including the Russian rouble and the euro in many of its key markets, cost the airline Dh1.5 billion, said Shaikh Ahmad.
Meanwhile, the 80-day runway closure for refurbishment work at Dubai International last year cost the group an estimated Dh1.6 billion in lost revenue, Shaikh Ahmad said. Emirates grounded 19 aircraft for the period, reducing its capacity by 9 per cent. But Emirates was able to circumvent much of this, including geopolitical issues that closed air space in the region, due to its flexibility, said John Strickland, director of JLS Consulting, by email. “It is able to downsize capacity or even suspend routes when it faces difficult market conditions. By the same token it is able to move aircraft to where opportunities exist far more quickly than most of its competitors,” he said, adding that the year ahead looks “strong” for the airline.
“There will be no Dubai runway closure this year, the airline is seeing good performance even in a number of troubled markets and it will add to its fleet and network,” he said.
Passenger & cargo growth
The airline carried 49.3 million passengers, 11 per cent more than the 44.5 million that flew with the carrier in the previous fiscal year. Emirates filled on average 79.6 per cent of seats throughout the 2014-2015 financial year, 0.2 percentage points more than the previous fiscal year. The airline carried 2.4 million tonnes of cargo, up 6 per cent, compared to the 2.3 million tonnes it reported a year ago.
The world’s largest operator of the Airbus A380 received 24 new aircraft during the year, including 12 superjumbos, 10 Boeing 777-300ERs (extended range) and two Boeing 777 freighters. Ten aircraft were phased out over the same period. As of March 31, the airline had 231 aircraft in its fleet, 14 more than the 217 it was operating a year ago. Today, the fleet size has increased to 233 and includes 60 A380s.