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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