Mixed bag financial performance for Emirates Group

The Emirates Group has seen a mixed bag of financial results.

The Group posted an AED 8.2 billion (US$ 2.2 billion) profit for the financial year ending 31 March 2016, up 50% from last year. However, the Group’s revenue reached AED 93 bn (US$ 25.3 bn ), a decrease of three percent over last year’s results, and the Group’s cash balance increased to AED 23.5 bn (US$ 6.4 bn).

With significant currency devaluations against the US dollar and fare adjustments following the reduction in fuel prices, Emirates revenue dropped four percent to AED 85 bn (US$ 23.2 bn). The relentless rise of the US dollar against currencies in most of Emirates’ key markets also had an AED six billion bn (US$ 1.6 bn) impact on airline revenue, and an AED 4.2 billion (US$ 1.1 billion) impact to the airline’s bottom line. However, total operating costs decreased by eight percent over the 2014-15 financial year.

HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group, said: “Emirates and dnata delivered solid business results, and continued to grow throughout 2015-16. 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.”

In 2015-16, the Group collectively invested over AED 17.3 bn (US$ 4.7 bn) in new aircraft and equipment.

“We will continue to evolve and grow our business profitably, and work even harder to meet and exceed our customers’ expectations,” said Sheikh Ahmed.

Emirates’ total passenger and cargo capacity crossed the 56 bn mark, to 56.4 bn ATKMs at end of 2015-16. The airline increased capacity during the year by 5.5 bn Available Tonne Kilometres (ATKMs), or 11% over 2014-15.

Emirates received 29 new aircraft including 16 A380s, 12 Boeing 777-300ERs and one Boeing 777F, bringing its total fleet count to 251 at the end of March. At the same time nine aircraft were phased out, taking the average fleet age down to 74 months or approximately half the industry average of 140 months.

The average price of jet fuel fell during the financial year, supporting Emirates’ bottom line improvement. The airline’s fuel bill decreased by 31% over last year to AED 19.7 bn (US$ 5.4 bn). Fuel is now 26% of operating costs, compared to 35% in 2014-15, but it remained the biggest cost component for the airline.

The airline successfully managed increased competitive pressure across all markets to record a profit of AED 7.1 bn(US$ 1.9 bn), an increase of 56% over last year’s results, and a healthy profit margin of 8.4%.

Carrying a record 51.9 million passengers (up eight percent), Emirates crossed the 50 million passenger milestone, and achieved a Passenger Seat Factor of 76.5%. The decline in passenger seat factor compared to last year’s 79.6%, is relative to the strong 13% increase in seat capacity by Available Seat Kilometres (ASKMs), and also in part due to lingering economic uncertainty and strong competition in many markets.

Under pressure from the weakening of all major currencies against the USD, passenger yield dropped to 26.7 fils (7.3 US cents) per Revenue Passenger Kilometre (RPKM).

Revenue generated from across Emirates’ six regions continues to be well balanced, with no region contributing more than 30% of overall revenues. Europe is the highest revenue contributing region with AED 24.0 bn(US$ 6.5 bn), down five percent from 2014-15. East Asia and Australasia follows closely with AED 22.4 bn (US$ 6.1 bn), down nine percent. The Americas region recorded revenue growth at AED 12.0 bn (US$ 3.3 bn), up nine percent. Africa and Gulf and Middle East revenue decreased each by three percent to AED 9.1 bn (US$ 2.5 bn) and AED 8.4 bn (US$ 2.3 bn) respectively; and West Asia and Indian Ocean revenue decreased by four percent to AED 7.6 bn (US$ 2.1 bn).

For 2016-17, Emirates has announced new routes to Yinchuan and Zhengzhou in China, Yangon in Myanmar and Hanoi in Vietnam, aside from capacity upgrades to existing destinations.