Logistics Middle East : 2020-07-01

NEWS ANALYSIS : 15 : 15

NEWS ANALYSIS

EMIRATES NEWS ANALYSIS | DNATA’S PROFITS HIT BY COVID-19 AND THOMAS COOK COLLAPSE The Emirates group’s ground services division, dnata, increased revenues by 2% to $4 billion in 2019-20 but saw profits fall 57% down to $168 million, which includes $59 million one-time gain from the sale of its stake in Accelya. Profits were impacted by goodwill impairment­s amounting to $45 million, write-offs due to Thomas Cook’s collapse amounting to $26 million and Covid-19, which has so far cost dnata $75 million. But dnata managed to secure a string of new contracts across four divisions and saw particular growth in its catering arm. The firm’s internatio­nal business now accounts for 72% of its revenue. dnata invested more than $218 million in acquisitio­ns, new facilities and equipment, technologi­es and people developmen­t during the year. In 2019-20, dnata’s operating costs increased by 8% to $3.9 billion, in line with organic growth across its business divisions. Its cash balance was $1.4 billion, an increase of 4%. Revenue from dnata’s UAE airport operations, including ground and cargo handling remained steady at $864 million. The number of aircraft movements handled by dnata in the UAE declined by 11% to 188,000. This reflects the impact of the DXB runway closure in April-May 2019, and the suspension of scheduled passenger flights at both Dubai airports due to the pandemic. During the year, dnata executed the UAE’s first green turnaround of a flydubai aircraft at DXB. Its airport services brand, marhaba, opened an expanded and refurbishe­d lounge at Dubai Internatio­nal airport, and expanded its internatio­nal network with a new lounge in Singapore’s Changi Airport. operators in a post-pandemic world. Emirates and dnata stand to reactivate our operations to serve our customers, as soon as circumstan­ces allow.” Emirates’ total passenger and cargo capacity declined by 8% to 58.6 billion ATKMs at the end of 2019-20, due to the DXB runway closure capacity restrictio­ns and Covid-19 impact with a complete suspension of passenger services as directed by the UAE government during March 2020. Emirates received six new aircraft during the financial year, all A380s. During 2019-20, Emirates phased out six older aircraft comprising of four Boeing 777-300ERs, its last 777-300 and one Boeing 777 freighter leaving its total fleet count unchanged at 270 at the end of March. Emirates’ average fleet age remains at a youthful 6.8 years. While Emirates recorded a strong revenue performanc­e during its 2nd and 3rd quarters of 2019-20, the DXB runway closure and Covid-19 crisis in the other quarters impacted its total revenue for the financial year with a decline of 6% to $25.1 billion. The relative strengthen­ing of the US dollar against currencies in many of Emirates’ key markets had a $262 million negative impact to the airline’s bottom line, a substantia­l increase compared to the previous year’s negative currency impact of $156 million. Total operating costs decreased by 10% over the 2018-19 financial year. The average price of jet fuel declined by 9% during the financial year after last year’s 22% increase. Including a 6% lower uplift in line with capacity reduction, the airline’s fuel bill declined substantia­lly by 15% over last year to $7.2 billion) and accounted for 31% of operating costs, compared to 32% in 2018-19. Fuel remained the biggest cost component for the airline. Overall passenger traffic declined, as Emirates carried 56.2 million passengers (down 4%). With seat capacity down by 6%, the airline achieved a Passenger Seat Factor of 78.5%. An increase in market fares and a favourable route mix was completely offset by the strengthen­ing of the US dollar against most currencies and left the passenger yield unchanged at 26.2 fils (7.1 US cents) per Revenue Passenger Kilometre (RPKM). During the year, Emirates raised a total of $2.5 billion in aircraft financing, funded through term loans and will continue to tap the bank market for further liquidity in the first quarter of 2020-21 to provide a cushion against the impact of Covid-19 on the cash flows in the short term. Emirates closed the financial year with a healthy level of $5.5 billion of cash assets. 15 LOGISTICS MIDDLE EAST | JULY-AUGUST 2020 www.logisticsm­iddleeast.com

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