Emirates awards five-week bonus to staff after profit rise
Airline’s parent declares dividend of Dh2 billion to the Investment Corporation of Dubai
Emirates Group, operator of the world’s biggest long-haul airline, will award a five-week bonus to its employees in this month’s paycheque after it announced a 67 per cent rise in profit for the past financial year.
The payout is in line with previous year’s benefits, although in years gone by some of the group’s about 100,000 staff have received more than that.
Emirates yesterday said net profit for the airline rose 124 per cent to Dh2.8 billion in its fiscal year ending on March 31.
Its parent company Emirates Group, which also includes its Dnata ground-handling and cargo company, posted a 67 per cent rise in profit to Dh4.1bn for the same period.
Higher revenues, seat capacity and a decline in the US dollar against major currencies in most of its key markets were given as the principle factors behind the growth.
And the tie-up last year with low-cost sister airline flydubai has helped to streamline operational costs and boost revenues.
Emirates reduced its payroll by 3 per cent in the past year and has begun a recruitment drive for cabin crew , advertising vacancies on its website, amid reports that the airline is facing a shortage of pilots and other crew.
But Emirates Group chairman Sheikh Ahmed bin Saeed yesterday dismissed reports of a recent spate of resignations and denied the group was facing a shortage of staff.
Sheikh Ahmed also said closer co-operation with Abu Dhabi’s Etihad Airways in catering, ground-handling and lounge sharing would be beneficial.
“The relationship with Etihad is going in the right direction, and my view is we can continue this,” Sheikh Ahmed said.
Emirates airline, the world’s biggest operator of wide-body aircraft, reported a 124 per cent rise in profit for its last fiscal year on the back of higher revenue and a decline in the US dollar against major currencies in most of its key markets.
The world’s biggest longhaul airline said yesterday that net profit rose to Dh2.8 billion in its fiscal year ending March 31.
The parent company Emirates Group, which also includes its Dnata ground-handling operations and cargo, posted a 67 per cent rise in profit to Dh4.1bn in the same period.
“Business conditions in 201718, while improved, remained tough,” said Sheikh Ahmed bin Saeed, chairman of Emirates.
“We saw ongoing political instability, currency volatility and devaluations in Africa, rising oil prices which drove our costs up and downward pressure on margins from relentless competition... on the positive side, we benefited from a healthy recovery in the global air cargo industry, as well as the relative strengthening of key currencies against the US dollar.”
Emirates carried 4 per cent more passengers, serving a record 58.5 million people. It reported a 77.5 per cent seat load factor in the period compared to 75.1 per cent previously.
The airline’s revenue increased 9 per cent to Dh92.3bn, supported by strong cargo performance, while group revenue climbed 8 per cent to Dh102.4bn over last year’s results. Total passenger and cargo capacity crossed 61 billion available tonne kilometres in the last fiscal year.
An expanded codeshare agreement with low-cost sister airline flydubai benefited Emirates, as would closer collaboration in the future with Abu Dhabi’s Etihad Airways – in catering, ground-handling and lounge facility sharing, Sheikh Ahmed told reporters.
“The relationship with Etihad is going in the right direction, and my view is we can continue this,” he said.
In line with profit growth, the group declared a dividend of Dh2bn to majority shareholder the Investment Corporation of Dubai. The strong results come after Emirates saw profits plunge 82 per cent in the 201617 fiscal year. Like other Middle Eastern airlines, Emirates was hit hard by tough operating conditions at the start of 2017, including travel restrictions on US routes, a ban on large electronic devices in cabins and currency fluctuations.
“Emirates’s business environment has markedly improved over the last financial year,” said Diogenis Papiomytis, director of commercial aviation at management consultancy Frost & Sullivan.
“The US presidency has not been as disruptive to Gulf airlines’ US operations as previously expected, while socio-political destabilising events have reduced in their number and impact.”
Global airline yields are projected to bounce back after five years of consecutive declines, according to the International Air Transport Association.
Emirates has implemented several measures to boost revenues in the last fiscal year, including charging for advance seat selection and reducing its payroll by 3 per cent from the previous year.
“The recovery was fast because the reaction was fast,” said Andrew Charlton, managing director of consultancy Aviation Advocacy.
“They did the right things – trimmed capacity, trimmed costs and looked at their operations through gimlet eyes. The plan to refresh the fleet will save fuel too, which is just as well as the oil price goes up past $70 again.”
Looking ahead, Sheikh Ahmed said he expected a “good” 2018/19 and that escalating fuel costs would be the single biggest challenge for the coming year. Emirates planned to keep identifying efficiencies, he said.
The airline’s fuel bill increased 18 per cent in the 2016/17 fiscal year and total operating costs rose by 7 per cent. Emirates is unlikely to hedge fuel because of rising oil prices, Sheikh Ahmed said.
The airline had no immediate plans to stop flights to Iran following the US decision on Tuesday to exit the Iran nuclear deal, he said. “We continue to fly to Iran and through its airspace.
“The airline cannot control geopolitical issues and we will do what we always do in such situations: look at which new markets to go to.”
In February, Emirates confirmed a preliminary $16bn order from Airbus for 20 A380 aircraft and options for 16 more.
The airline is expected to exercise its A380 options “soon”, Sheikh Ahmed said.
Meanwhile, the expanded codeshare partnership between Emirates and flydubai has helped boost the bottom line.
The partnership launched codeshare routes to more than 80 destinations to date, with plans to build a joint network of 240 destinations by 2022.
Dnata’s ground handling business achieved its highest profit ever, reaching Dh1.3bn.
The relationship with Etihad is going in the right direction, and my view is we can continue this SHEIKH AHMED BIN SAEED Emirates chairman
This week has been one of the biggest in the aviation calendar. Emirates announced its fullyear results yesterday, hot on the heels of the latest Airport Show in Dubai, where GCC operators outlined ambitious growth plans from expansion projects to IPOs as the Middle East travel market revives.
Emirates posted a stellar set of results demonstrating a clear turnaround from the 82 per cent profit drop reported in the 2016-17 fiscal year.
In this fiscal year to March 31, its profits more than doubled by 124 per cent to Dh2.8 billion, while Emirates Group profit rose 67 per cent to Dh4.1bn.
The latter was boosted by Dnata, the group’s ground-handling division, achieving record profit and revenue, and a strong cargo performance.
Emirates benefited from higher revenue, improved seat capacity and relative strengthening of key currencies against the US dollar.
As one analyst pointed out, the initially destabilising impact of policies such as the laptop ban enacted in the first 12 months of the US presidency, as well as localised socio-political issues, had not been as disruptive as was expected.
Still, Emirates chairman Sheikh Ahmed bin Saeed hinted he was against taking any chances and would continue to find efficiencies across the business. For a long-haul airline such as Emirates, rising fuel prices is a particular cause for concern.
The Middle East aviation sector could see further consolidation after Emirates announced a partnership with low-cost sister airline flydubai last year.
At Dubai’s Airport Show, regional airport representatives from Oman to Saudi Arabia highlighted the importance of aviation to their plans for economic diversification.
Saudi Arabia’s third-biggest airport, in Dammam, will more than double its capacity by 2025 to handle the influx of visitors expected as the kingdom invests in tourism projects such as a Red Sea beach resort and multibillion-dollar Qiddiya theme park.
King Fahd International Airport, the eastern gateway to the kingdom, will expand its terminal to 30 million passengers annually, up from 12.6 million currently, as part of a multi-phased master-plan that may include a new terminal. This is the first phase of a 30-year plan to grow the hub, details of which will be announced in July.
Neighbouring Oman is studying a plan to sell a stake in the state-owned airports management company by 2020 as part of a privatisation push.
The sultanate aims to create more tourism jobs and boost visitors to the country. This includes plans to expand Muscat International Airport.