In trying year for airlines, Emirates posts $1.1 billion net profit

In a year that presented multiple air pockets for airline companies in the form of a global downturn Dubai-based Emirates posted net profit of $ 1.1 billion.

By ET Bureau | May 12, 2010, 04.50 PM IST

THIRUVANANTHAPURAM: In a year that presented multiple air pockets for airline companies in the form of a global downturn and market uncertainty among others, Dubai-based Emirates Group has posted a net profit of $ 1.1 billion. The figure represents a 248% growth from the net profit earned in the previous year. Of the group’s net profit, $964 was accounted for by the airline.

Emirates Airline and Group chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum said the first half of 2009-10 had been “extremely challenging” and that an “extremely strong performance” in the latter part of the year had contributed to the record achievement.

The Emirates Group revenue remained stable at $12.4 billion, reflecting lower passenger and cargo yields offset by increased traffic, and the group profit margin improved to 9.1% from 2.6% a year earlier.

Significantly, the group’s cash balance at the end of March 2010 grew 43% to $3.4 billion, after the group’s investment in new aircraft, aircraft-related equipment and dedicated lounges.

Two good reasons for Emirates’ strong performances were the increase in passengers by 4.7 million from the previous year to touch a level of 27.5 million, and group company Dnata’s expansion of its international ground handling operations to 20 airports in nine countries.

Sheikh Ahmed said, “The 21% increase in passenger numbers from last year is an incredible result and it helped cushion us from the effects of lower yields”. He said the increase in passenger numbers was attributable not only to the airline’s position at the centre of the new Silk route between the east and the west, but also to the airline’s commitment to increasing its network and service standards, and pointed out that financial losses for airlines worldwide for 2009 had touched $9.4 billion.

Some of Emirates Group’s recent milestones include addition of 15 new aircraft, the opening of Wolgan Valley Resort and Spa in Australia and the expansion of the A380 route network to several new airports including Seoul, Bangkok, Toronto, Paris and Jeddah.

Clarifying an oft-repeated query about subsidies, Sheikh Ahmed said the group was “unsubsidized and wholly unprotected from foreign competition in our home market, thanks to Dubai’s open skies policy”.

The airline, however, benefited from a significantly lower fuel cost in 2009-10. Fuel costs during the year were lower by $691 million, accounting for 29.9% of total operating costs, down from 35.2% in the previous year. At the end of the financial year, Emirates had a 142-strong fleet including four freighters. On its order book are 146 aircraft, worth over $48 billion.

babina.wahengbam: Everyone sees who I appear to be but only a few know the real me. You only see what I choose to show. There's so much behind my smile you just don't know...
Sent at 4:47 PM on Wednesday

Not making enough money in stocks? Click here for real-life stories of successful investors.

Too busy to trade in stocks? Invest in Mutual Funds with ET Money!