Nnounces 2017-18 re­sults

The Malta Business Weekly - - FRONT PAGE -

Pas­sen­ger Kilo­me­tre (RPKM).

To fund its fleet growth dur­ing the year with high on­go­ing new air­craft de­liv­er­ies, Emi­rates raised AED17.9bn ($4.9bn), us­ing a va­ri­ety of fi­nanc­ing struc­tures, in­clud­ing the suc­cess­ful ex­e­cu­tion of a $600m sukuk in March to fund the ac­qui­si­tion of two A380 air­craft to be de­liv­ered in 2018.

Emi­rates con­tin­ues to tap the Ja­panese struc­tured fi­nance mar­ket in con­junc­tion with debt from a wide-rang­ing group of in­sti­tu­tions in China, France, the United King­dom and Ja­pan. The com­pany raised in ex­cess of AED3.7bn ($1bn) dur­ing the year from this source. Emi­rates has also re­fi­nanced a com­mer­cial bridge fa­cil­ity (due to non-avail­abil­ity of ECA cover) of AED3.8bn ($1.0bn) via an in­no­va­tive fi­nance lease struc­ture for five A380-800 air­craft, ac­cess­ing an in­sti­tu­tional in­vestor and bank mar­ket base from Korea, Ger­many, the United King­dom and the Mid­dle East.

These deals align with Emi­rates’ fi­nanc­ing strat­egy and demon­strates its abil­ity to un­lock di­verse fi­nanc­ing sources through ac­cess to global liq­uid­ity. It also un­der­scores its sound fi­nan­cials and the strong in­vestor con­fi­dence in the air­line’s busi­ness model.

Emi­rates closed the fi­nan­cial year with a healthy and in­creased level of AED20.4bn ($5.6bn) of cash as­sets.

Rev­enue gen­er­ated from across Emi­rates’ six re­gions con­tin­ues to be well bal­anced, with no re­gion con­tribut­ing more than 30% of over­all rev­enues. Europe was the high­est rev­enue con­tribut­ing re­gion with AED26.7bn ($7.3bn), up 12% from 2016-17. East Asia and Aus­trala­sia fol­lows closely with AED25.4bn ($6.9bn), up 12%. The Amer­i­cas re­gion recorded rev­enue growth at AED13.4bn ($3.7bn), up 7%. Gulf and Mid­dle East rev­enue de­creased by 2% to AED8.5bn ($2.3bn) whereas rev­enue for Africa in­creased by 8% to AED9.4bn ($2.6bn). West Asia and In­dian Ocean rev­enue in­creased by 5% to AED 7.8bn ($2.1bn).

Through the year, Emi­rates in­tro­duced prod­uct and ser­vice im­prove­ments on board and on the ground.

Key high­lights in­clude the launch of fully-en­closed suites in First Class to­gether with re­freshed Busi­ness Class and Econ­omy Class cab­ins on the 777-300ER air­craft; new, wider Busi­ness Class seats ar­ranged in a 2-2-2 lay­out on the 777-200LR air­craft and a re­freshed ver­sion of the pop­u­lar On­board Lounge on the Emi­rates A380.

On the ground, Emi­rates added a new ded­i­cated lounge in Bos­ton for its premium pas­sen­gers and fre­quent fly­ers; re­fur­bished ex­ist­ing lounges in Sin­ga­pore and Bangkok and com­pleted a US$11m makeover of its lounges in Dubai air­port Con­course B.

Emi­rates also in­vested in new chan­nels and tech­nol­ogy to of­fer even bet­ter and more per­son­alised cus­tomer ex­pe­ri­ences on­line, on mo­bile, as well as via its re­tail and con­tact cen­tres.

For 2018-19, Emi­rates has an­nounced new routes to Lon­don Stansted in the UK, San­ti­ago in Chile, Ed­in­burgh in Scot­land, and an ad­di­tional flight be­tween Dubai and Auck­land via Bali, aside from ca­pac­ity up­grades to ex­ist­ing des­ti­na­tions.

Emi­rates SkyCargo recorded a strong per­for­mance in a resur­gent mar­ket and con­tin­ues to play an in­te­gral role in the com­pany’s ex­pand­ing op­er­a­tions, con­tribut­ing 14% of the air­line’s to­tal trans­port rev­enue.

In an air­freight mar­ket with fastchang­ing de­mand pat­terns, Emi­rates’ cargo divi­sion re­ported a rev­enue of AED12.4bn ($3.4bn), an im­pres­sive in­crease of 17% over last year, while ton­nage car­ried slightly in­creased by 2% to reach 2.6 mil­lion tonnes.

This year, freight yield per Freight Tonne Kilo­me­tre (FTKM) in­creased by 14%, re­flect­ing a very pos­i­tive mar­ket en­vi­ron­ment for the in­dus­try, and the weak­en­ing of the USD against ma­jor cur­ren­cies.

Emi­rates’ SkyCargo’s to­tal freighter fleet stood at 13 Boe­ing 777Fs. In ad­di­tion to belly-hold ca­pac­ity to Emi­rates’ new pas­sen­ger des­ti­na­tions, Emi­rates SkyCargo launched new freighter ser­vices to Maas­tricht (Nether­lands), Lux­em­bourg and Aguadilla (Puerto Rico).

Emi­rates SkyCargo con­tin­ued to de­velop in­no­va­tive, be­spoke prod­ucts tai­lored to key in­dus­try sec­tors. In Novem­ber, it signed an MoU with Dubai Com­merCity to de­velop new so­lu­tions for the e-com­merce sec­tor us­ing Dubai as a hub.

Dur­ing the year, Emi­rates SkyCargo launched Emi­rates Fresh for per­ish­able com­modi­ties such as fresh cut flow­ers, fruits and veg­eta­bles. For tem­per­a­ture-sen­si­tive Pharma prod­ucts, Emi­rates SkyCargo rolled out a pharma cor­ri­dors pro­gramme to of­fer en­hanced ori­gin-to-des­ti­na­tion pro­tec­tion and it also part­nered with DuPont to in­tro­duce White Cover Xtreme, a next gen­er­a­tion ther­mal blan­ket to pro­tect sen­si­tive cargo.

Emi­rates’ ho­tels recorded rev­enue of AED746m ($203m), a mod­er­ate in­crease of 1% over last year in a highly com­pet­i­tive mar­ket mainly in the UAE.

dnata per­for­mance

In its 59 years of op­er­a­tion, 201718 has been dnata’s most prof­itable year, cross­ing AED1.3bn ($359m) profit for the first time. Build­ing on its strong re­sults in the pre­vi­ous year, dnata’s rev­enue grew to AED13.1bn ($3.6bn), up 7%. dnata’s in­ter­na­tional busi­ness now ac­counts for 68% of its rev­enue.

The strong per­for­mance was achieved through or­ganic growth with key con­tract wins cou­pled with solid cus­tomer re­ten­tion across its four busi­ness di­vi­sions, as well as the im­pact of ac­qui­si­tions from pre­vi­ous year.

dnata con­tin­ued to lay the foun­da­tions for fu­ture growth by in­vest­ing AED600m in new fa­cil­i­ties and equip­ment, ac­qui­si­tions, leadingedge tech­nolo­gies and peo­ple de­vel­op­ment.

One of its key ini­tia­tives in 201718 was to em­bark on the jour­ney to im­ple­ment a new En­ter­prise Re­source Plan­ning so­lu­tion that will trans­form its busi­ness support func­tions and pro­vide real time in­for­ma­tion to en­able bet­ter de­ci­sion-mak­ing, gov­er­nance, ef­fi­ciency and scal­a­bil­ity for con­tin­ued growth and ex­pan­sion.

In 2017-18, dnata’s op­er­at­ing costs in­creased ac­cord­ingly by 8% to AED11.9bn ($3.2bn), re­flect­ing the im­pact of or­ganic growth across all lines of busi­ness cou­pled with in­te­grat­ing the newly ac­quired com­pa­nies mainly across its in­ter­na­tional air­port op­er­a­tions.

dnata’s cash bal­ance reached AED4.9bn ($1.3bn), a new record high. The busi­ness de­liv­ered an AED1.9bn ($506m) cash flow from op­er­at­ing activities in 2017-18, which is also a new record in line with the en­hanced cash bal­ance.

Rev­enue from dnata’s UAE Air­port Op­er­a­tions, in­clud­ing ground and cargo han­dling in­creased by 4% to reach AED3.2bn ($859m).

The num­ber of air­craft move­ments han­dled by dnata in the UAE de­clined by 2% to 211,000 im­pacted by the geopo­lit­i­cal sit­u­a­tion in the re­gion, whereas Cargo han­dling in­creased by 2% to 731,000 tonnes, sup­ported by the strong over­all air cargo mar­ket.

In ad­di­tion to the steady de­liv­ery of ini­tia­tives started in 2014 to op­ti­mise its op­er­a­tions, cov­er­ing fa­cil­ity im­prove­ments, process changes, in­fra­struc­ture up­grades and IT de­vel­op­ment, dnata also suc­cess­fully tested the use of blockchain tech­nol­ogy to fur­ther stream­line and sim­plify its cargo de­liv­ery pro­cesses from ori­gin to fi­nal des­ti­na­tion.

dnata’s In­ter­na­tional Air­port Op­er­a­tions divi­sion grew rev­enue by 14% to AED3.8bn ($1bn), on ac­count of in­creas­ing busi­ness vol­umes, open­ing of new lo­ca­tions and win­ning new con­tracts.

In­ter­na­tional air­port op­er­a­tions con­tinue to rep­re­sent the largest busi­ness seg­ment in dnata by rev­enue con­tri­bu­tion. The num­ber of air­craft han­dled by the divi­sion fur­ther in­creased sub­stan­tially by 10% to 449,000, and Cargo noted a sub­stan­tial growth of 10% to 2.4 mil­lion tonnes of han­dled goods.

dnata con­tin­ued to win over cus­tomers with its high qual­ity stan­dards, ink­ing over 90 con­tracts with new and ex­ist­ing cus­tomers dur­ing the year.

Dur­ing the year, dnata made sig- nif­i­cant in­vest­ments which ex­panded its ca­pa­bil­ity and global pres­ence. In May, dnata en­tered the US cargo mar­ket with its ac­qui­si­tion of AirL­o­gis­tix USA. The in­vest­ment in­cludes state-of-the-art cargo han­dling fa­cil­i­ties in Hous­ton and Dal­las Fort-Worth. dnata also ex­panded its cargo han­dling ca­pa­bil­i­ties at Gatwick, opened an ad­di­tional cargo ware­house in Schiphol and a new air­side cargo fa­cil­ity in Ade­laide.

In the US, it re­ceived a new li­cence to pro­vide ground-han­dling ser­vices at John F. Kennedy In­ter­na­tional Air­port’s Ter­mi­nal 4 and it com­menced op­er­a­tions at JFK’s Ter­mi­nal 8. In Sin­ga­pore, dnata be­gan op­er­a­tions at Sin­ga­pore Changi Air­port’s new Ter­mi­nal 4 and opened a new main­te­nance base for ground ser­vice equip­ment.

dnata’s Cater­ing busi­ness ac­counted for AED2.1bn ($585m) of its to­tal rev­enue, up 7%. The in­flight cater­ing busi­ness up­lifted more than 55 mil­lion meals to air­line cus­tomers.

Dur­ing the year, dnata opened a state-of-the-art cater­ing hub at Mel­bourne air­port, the largest such fa­cil­ity in the south­ern hemi­sphere and a sec­ond cater­ing fa­cil­ity in Ire­land at Dublin air­port. It also en­tered the Cana­dian mar­ket when it was awarded a li­cence to pro­vide flight cater­ing ser­vices to air­lines de­part­ing Van­cou­ver In­ter­na­tional Air­port and has com­menced plans to build a ded­i­cated cater­ing fa­cil­ity there.

dnata strength­ened its pres­ence in the North Amer­i­can mar­ket with the ac­qui­si­tion of 121 in-flight cater­ing, a New York-based in-flight and VIP caterer in March. This is pend­ing ap­proval from the Com­mit­tee of For­eign In­vest­ments in the United States (CFIUS). In April, dnata an­nounced the ac­qui­si­tion of Qan­tas’ cater­ing busi­ness, sub­ject to the ap­proval of the Aus­tralian Com­pe­ti­tion and Con­sumer Com­mis­sion.

Rev­enue from dnata’s Travel Ser­vices divi­sion has seen a turn­around af­ter last year’s de­cline with an in­crease of 8% to AED3.4bn ($922m). The un­der­ly­ing to­tal trans­ac­tion value (TTV) of travel ser­vices sold in­creased by 6% to AED11.3bn ($3.1bn).

This solid per­for­mance was sup­ported by dnata’s abil­ity to tap on the up­swing in both inbound and out­bound tourism de­mand in the Mid­dle East and a healthy in­crease in long-haul travel and cruise book­ings in Europe and Australia.

In 2017-18, dnata com­pleted its ac­qui­si­tion of a stake in Des­ti­na­tion Asia, a lead­ing des­ti­na­tion man­age­ment com­pany with op­er­a­tions across 11 Asian coun­tries, mak­ing its en­try into South East Asia’s inbound travel mar­ket. Its UKbased Imag­ine Cruis­ing busi­ness, com­pleted a suc­cess­ful first year of trad­ing in Australia and ac­quired Hol­i­day Planet, a lead­ing travel com­pany in Perth to boost growth in this mar­ket.

Dur­ing the year, dnata in­vested in tech­nol­ogy to pro­vide en­hanced func­tion­al­ity and a bet­ter ser­vice ex­pe­ri­ence for its part­ners and cus­tomers. This in­cluded the cre­ation of two travel reser­va­tion sys­tems for Emi­rates Hol­i­days and dnata Travel’s B2B busi­ness, to re­place ex­ist­ing ones. The full 2017-18 An­nual Re­port of the Emi­rates Group – com­pris­ing Emi­rates, dnata and their sub­sidiaries – is avail­able at www.theemi­rates­group.com/an­nu­al­re­port

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