Emirates profits down on fuel costs

Emirates Airline produced a net profit of Dhs 284 million (US $77 million), for the first six months of its current financial year ending 30th September 2008.  This is down 88 per cent compared to Dhs 2.36 billion ($643 million) net profits for the same period in 2007, showing the impact of the record fuel prices earlier this year.HH Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group said: “The first half of the year has been very tough for the airline industry, with record fuel prices forcing many carriers to shut shop or consolidate. Emirates has worked hard to manage the impact of high fuel prices on our unit costs, while continuing to grow our business and provide our customers with a quality product and service.

“We’ve made massive investments in our eco-efficient aircraft fleet; in our newly-opened world class airport terminal dedicated to Emirates operations; in strengthening our global route network; and also in the supporting infrastructure for our growing business. Recent events show that only the most efficient businesses will survive and prosper, and these investments put us in a strong position to weather the current crunch and future challenges.”

Sheikh Ahmed added: “Our business fundamentals are solid, and providing there is no further fall-out from the current global financial situation, we anticipate a robust second half of the financial year.”

Crude oil prices averaged $122 per barrel for the first six months of the financial year, up from an average of $67 for the same period last year, whilst the differential between crude and aviation fuel was also up from an average of $16 per barrel to $28.  Overall, Emirates’ fuel costs were higher than budgeted by Dhs 1.7 billion ($469 million).

The drop in profits reflect a 40 per cent increase in airline unit costs per tonne kilometre, with fuel spend more than doubling from last year’s Dhs 4.1 billion ($1.1 billion) to Dhs 9.2 billion ($2.5 billion).

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In the first-half of its financial year 2008-09, Emirates continued to post strong business growth, with operating revenues increasing by 31 per cent to Dhs 22.1 billion ($6 billion).  Passenger traffic (RPKM) was up 11 per cent, cargo tonnes up 13 per cent, and passenger yield increased by 20 per cent.

Seat factor averaged 78.3 per cent, down slightly on 79.7 percent for last year, against a 13 per cent increase in capacity (ASKMs).

Emirates’ cash position on 30th September was Dhs 8.4 billion ($2.3 billion), compared to Dhs 12.6 billion ($3.4 billion) six months earlier.  This was after paying dividends to the Government relating to the previous financial year, as well as funding pre-delivery payments for future aircraft deliveries and the upgrade programme for some of its aircraft fleet.

Since April 2008, Emirates has launched passenger services to three new destinations - Kozhikode (Calicut), Guangzhou and Los Angeles, bringing its global network to 100 cities on six continents. The airline will launch non-stop flights to San Francisco on 15th December.

Emirates’ current fleet size is 121 aircraft. Since the beginning of the current financial year, Emirates received delivery of eight new wide body aircraft including two Airbus A380 superjumbo jets.
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