Emirates Group sees stratospheric profits

Dubai - Low oil prices help increase group's profit by 50% to Dh8.2b

Emirates Group on Tuesday declared its new record profit of Dh8.2 billion for financial year 2015-16, showing a 50 per cent increase compared to Dh5.5 billion reported in financial year 2014-15.

In line with the overall profit, the Group declared a dividend of Dh2.5 billion to the Investment Corporation of Dubai.

The annual results were announced during a news conference by Shaikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates airline and Group.

The Group's revenues dropped by three per cent to Dh92.9 billion in 2015-16 compared to Dh96.1 billion in the previous financial year.
Shaikh Ahmed said: "Against an unfavourable currency situation which eroded our revenues and profits, an uncertain global economic environment dogged by weak consumer and investor sentiment, as well as ongoing socio-political instability in many regions around the world, the Group's performance is testament to the success of our business model and strategies."

He mentioned that Emirates and dnata delivered record profits, solid business results and continued to grow throughout 2015-16.

"Our ongoing investments to develop our people and to enhance our business performance enable us to react with agility to the new challenges and opportunities that every year brings. In 2015-16, the Group collectively invested over Dh17.3 billion [$4.7 billion] in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies and staff initiatives. These will build on our strong foundations, extend our competitive edge and accelerate our progress towards our long-term goals," he added.

The Group's employee base across its more than 80 subsidiaries and companies increased by 13 per cent to over 95,000-strong, representing over 160 different nationalities.

"Looking at the year ahead, we expect that low oil prices will continue to be a double-edged sword - a boon for our operating costs, but a bane for global business and consumer confidence. The strong US dollar against major currencies will remain a challenge, as will the looming threat of protectionism in some countries. However, we enter the new financial year with confidence, backed by a robust balance sheet, solid track record, diverse global portfolio and international talent pool. We will continue to evolve and grow our business profitably and work even harder to meet and exceed our customers' expectations," said Shaikh Ahmed.

Emirates airline successfully managed increased competitive pressure across all markets to record a profit of Dh7.1 billion ($1.9 billion), an increase of 56 per cent over last year's results, and a healthy profit margin of 8.4 per cent, the strongest margin since 2010-11.

Overall passenger traffic growth continues to demonstrate the consumer desire to fly on Emirates' aircraft and via efficient routings through its Dubai hub. Premium and overall seat factor for Emirates' flagship A380 aircraft outperformed the network, underscoring the popularity of Emirates' premium and A380 product among passengers. At March 31, 2016, Emirates had 75 A380 aircraft in its fleet, serving one out of every four destinations on its passenger network.
Under pressure from the weakening of all major currencies against the US dollar, passenger yield dropped to 26.7 fils (7.3 US cents) per revenue passenger kilometre (RPKM).

In Asia, Emirates continued to tap the Japanese market for the Japanese Operating Lease (JOL) structure, and Japanese Operating Lease with a Call Option (JOLCO) on A380 and Boeing 777-300ER aircraft delivered during the year. Emirates also closed the first ever operating lease on an A380 financed entirely by the Korean institutional market through private placements with a group of non-bank financial institutions.

These deals align with Emirates' strategy to seek diverse financing sources and underscore its sound financials and the strong investor confidence in the airline's business model.

Emirates invested over Dh80 million ($21.9 million) last year to install and operate inflight connectivity across its fleet, which is now 70 per cent Wi-Fi enabled. The airline also launched revamped amenity kits for first and business class customers, a new range of children's toys and activity packs onboard, unveiled an enhanced fully-flat business class seat for its 777-300ER fleet, and launched its two-class configured A380 featuring the largest personal inflight entertainment screens in economy class. Emirates also opened new dedicated airport lounges in Tokyo Narita and Cape Town, taking the number of dedicated Emirates lounges across the world to 39, having invested more than $352 million in its lounge programme since inception.

- abdulbasit@khaleejtimes.com