The Emirates Group has posted a record profit increase of 248 percent, an outstanding result in a year fraught with worldwide market instability and economic uncertainty.
The 2009-10 Annual Report of the Emirates Group - comprising Emirates Airline, Dnata and their subsidiary companies – was released in Dubai today at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.
Sheikh Ahmed said: “It has been an exceptional year of continued profitability against a backdrop of the worst global recession in generations. The first half of the financial year however, was extremely challenging as the world continued to grapple with the economic crisis. Our pioneering spirit and ability to adapt in adverse conditions helped us to push through this harsh economic climate with an extremely strong performance in the latter part of the year.”
In a difficult year the Group’s net profits increased 248 percent to AED 4.2 billion (US$ 1.1 billion) for the financial year ended 31st March 2010. Group revenue remained stable at AED 45.4 billion (US$ 12.4 billion) reflecting lower passenger and cargo yields offset by increased traffic. The Group profit margin improved to 9.1 percent from 2.6 percent a year earlier.
The Group’s cash balance grew to AED 12.5 billion (US$ 3.4 billion) at the end of March, a remarkable improvement of 43.3 percent or AED 3.8 billion (US$ 1 billion) against the previous year. This excellent result is also after AED 3.4 billion (US$ 931 million) of investments mainly in new aircraft, other aircraft related equipment and dedicated lounges.
The Group’s outstanding performance this year, in some of the toughest operating conditions ever faced, reflects its success in maintaining its business as usual approach, remaining true to its strategy of product and service excellence. This is illustrated by the 27.5 million passengers who flew with Emirates in the latest financial year, 4.7 million more than in the previous year; as well as the expansion of Dnata’s international ground handling operations to 20 airports in nine countries.
Sheikh Ahmed continued: “Time and time again Emirates has weathered adversity. We have operated through regional conflict, SARS, the Asian economic collapse and most recently the global recession. Our 21 percent increase in passenger numbers from last year is an incredible result and has helped to cushion us from the effects of lower yields. This increase in passenger numbers is attributable not only to our position at the centre of the new Silk Road between East and West, but also to our commitment in increasing our network and service standards, during a time where many competitors were doing the opposite.”
In his opening review in the 2009-10 Annual Report, Sheikh Ahmed highlighted the Group’s ability to flourish in adversity, despite the International Air Transport Association (IATA) reporting that airlines’ financial losses worldwide for 2009 reached US$ 9.4 billion – the most difficult situation ever faced by the industry.
He also remarked on some of the many significant milestones for the Group that have helped ensure its continued growth and success which included Dnata’s overseas expansion strategy through business acquisitions; Emirates’ addition of 15 new aircraft; the celebration of Dnata’s 50th year of operations; the opening of Wolgan Valley Resort and Spa in Australia – one of the world’s leading sustainable hotels and Emirates’ A380 route network expansion to several new airports including Seoul, Bangkok, Toronto, Paris and Jeddah.
Sheikh Ahmed added: “Emirates is incredibly proud of the fact that we are unsubsidized and wholly unprotected from foreign competition in our home market, thanks to Dubai’s progressive open skies policy. We continue to grow, not through protectionism but through competition. It is our drive and determination to succeed that has helped us to earn our solid reputation worldwide and we have no intentions of pulling back the reigns on our expansion plans to suit the needs of our competition.”
Sheikh Ahmed concluded: “In a year of global ups and downs our determination to stand by our tradition of innovation has been one of our greatest achievements. The other is our ability to retain our talented staff. We have done this through a number of carefully thought out measures incorporating, effective redeployment of staff as well as a highly successful programme of voluntary unpaid leave. With 50,000 employees worldwide our staff are our greatest asset and we are committed to retaining each and every one of them. It is their passion and dedication that has helped to shape our company and it is this passion that will see the company continue to forge ahead.”
Emirates Airline’s revenues remained stable at AED 43.5 billion ($US 11.8 billion), an increase of 0.4 percent from the previous year. Airline profits of AED 3.5 billion (US$ 964 million) marked an increase of 416 percent over 2008-09’s profits of AED 686 million (US$ 187 million).
Despite a 16.9 percent capacity increase during 2009-10 to 28,526 million ATKM (Available Tonne Kilometres), the Emirates’ operating costs in total decreased by 2.7 percent compared with the previous year. This results in a significant unit cost improvement of 16.6 percent and impressive productivity gain per employee, as the average airline employee strength has only increased by 2.3 percent.
Fuel costs in 2009-10 were significantly lower than the previous year by a notable AED 2.5 billion (US$ 691 million), accounting for 29.9 percent of total operating costs, down from 35.2 percent the previous year. The major reason for the reduction in overall fuel costs was the result of a 30.8 percent reduction in average fuel jet cost per US gallon.
In 2009-10, the airline’s passenger fleet expanded with the delivery of 15 new aircraft, four Airbus A380’s, 10 Boeing 777-300ERs and one Boeing 777 freighter. At the end of the financial year Emirates’ fleet reached 142 aircraft including four freighters. During the year Emirates became the largest Boeing 777 operator when it took delivery of its 78th B777 aircraft. The current fleet of all wide-bodied aircraft has an average age of 69 months – one of the youngest commercial fleet in the skies.
At the end of the year, the total number of aircraft on Emirates’ order book, excluding options, was 146 aircraft, worth over US $ 48 billion.
During the year, the airline launched passenger services to three new destinations – Durban, Luanda and Tokyo – and increased frequencies onto existing routes in high-demand markets.
Emirates recorded an exceptional Passenger Seat Factor, at 78.1 percent, given there was also a high seat capacity (Available Seat Kilometres - ASKMs) increase of 20.6 percent.
Yield declined by 16.9 percent to 211 fils (57.5 US cents) per RTKM (Revenue Tonne Kilometre), down from 254 fils (69.2 US cents) in 2008-09. This decline in yield was countered by the increase in passenger seat factor.
In the 2009-10 financial year, six new Emirates Lounges were opened at airports in key points across the airline’s network, including the first lounge in India. The AED 266 million (US$ 72.5 million) worldwide investment has seen the number of dedicated lounges, aimed at our premium customers and top-tier Skywards loyalty programme members, grow to 26 across the network.
Furthering the investment in our product we raised baggage allowances by ten kilograms per person across all seating classes, this stood in stark contrast to competitors, many of whom were imposing restrictions and new baggage charges.
Skywards, Emirates frequent flyer programme celebrated its tenth anniversary with a complete programme re-launch. This year also saw the five millionth Skywards member join the programme.
Emirates continued to enhance its products in the air and on the ground investing AED 286 million (US$ 78 million) in upgrading cabin interiors and the award winning inflight entertainment system, ice in a number of aircraft.
Emirates SkyCargo carried 1.6 million tonnes of cargo, an improvement of 12.2 percent over the year’s previous 1.4 million tonnes. Cargo revenue at AED 6.3 billion (US$ 1.7 billion) is 8.1 percent lower than last year as the result of declining yields. Cargo revenue, including mail and courier, contributed 17.2 percent of the airline’s total transport revenue.
The division’s flexibility and ability to adapt quickly to changing market conditions led to Emirates SkyCargo rightsizing its fleet during the financial year. Emirates SkyCargo decreased its fleet from eight aircraft to seven – including five Boeing 747Fs and two Boeing 777Fs - helping to ward off the adverse effects of the economic downturn.
It was a difficult year for the Destination and Leisure Management (DLM) division of Emirates Airline, with package sales of AED 1 billion (US$ 272 million).
Emirates Holidays managed 165,000 total room nights booked during the year, a decrease on last year’s numbers, as customers opted for shorter breaks due to the tough economic conditions. Arabian Adventures, the region’s leading destination management company, opened its state-of-the-art Operations Centre in Dubai, a key investment in its long-term growth strategy. Congress Solutions International continued to win major global summits, including the organisation of the World Economic Forum Summit on the Global Agenda 2009, bringing together 700 VIP delegates from 90 countries.
The financial year also marked the opening of Emirates Hotels & Resorts conservation- based Wolgan Valley Resort & Spa in Australia’s Blue Mountains. It is the first hotel in the world to achieve carbon neutral certification and reflects DLM’s strategy of focusing on environmental and sustainable properties.
Dnata managed to hold ground during an incredibly challenging year achieving its highest ever profit in its 50 year history. Profits increased by 20.9 percent to reach a record AED 613 million (US$ 167 million) despite an intensely tough business climate for airport and cargo operations. Revenue remained stable with a marginal drop of 0.7 percent to AED 3.2 billion (US$ 861 million).
Dnata’s operating costs were 4.2 percent or AED 113 million (US$ 31 million) lower compared with the previous year based on major cost saving initiatives across all business segments.
Dnata Airport Operations started the 2009-10 financial year with a complete restructure, moving from a location-based organisation to a function based organisation. This was a defining initiative and enabled Airport Operations to grow, improving both productivity and profitability.
Dnata continues to play a major role in the Group’s growth by handling worldwide a record 192,120 aircraft (up 8.2 percent on last year) and 1,121 thousand tonnes of cargo, (up 11.8 percent over the previous year).
During 2009-10, Dnata International continued to expand its ground handling operations to bring its reach to 20 airports in nine countries. With the addition of London, Manchester and Erbil (Iraq) Dnata’s ground handling activities have increased by 45 percent with 26.9 percent of the company’s revenue from airport operations and cargo handling services coming from outside Dubai.
Dnata was the only company in the global ground handling sector to undertake a major acquisition in 2009 with the acquisition of two of the UK’s leading airport operations – Plane Handling which provides ramp and cargo handling services at Heathrow Airport as well as Cargo handling services at Manchester airport and Aviance which provides passenger and ramp handling operations at Heathrow’s Terminals 3 and 4. With these two new acquisitions Dnata’s international operations now handle as many aircraft turns and as much cargo volume as Dubai.
It was an incredibly tough year for Dnata Travel Services (DTS) with many people across the globe simply not travelling due to the recession. One of the more positive moments for DTS during the year was being honoured as the “World’s Leading Travel Management Company” at the 2009 World Travel Awards.
As of 31st March 2010, the Group and its subsidiaries employed 50,000 staff, representing 150 different nationalities. The full 2009-10 Annual Report of the Emirates Group – comprising Emirates Airline, Dnata and their subsidiary companies – is available on www.ekgroup.com/mediacentre