Dubai-based Emirates airline posted a whopping 282 per cent rise in net profit for the first half of its fiscal year 2019-2020, on the back of reduced costs.
The airline said its net profit during the six-month period reached Dhs862m ($235m), up 282 per cent, compared to Dhs226m during the same period last year.
Last year’s profit figures had marked an 86 per cent year-on-year drop.
The profit hike during the first six months of 2019-2020 came despite a 3 per cent drop in revenues during to period to Dhs47.3bn.
Improved profit came on the back of reduced operating costs, which shrunk by 8 per cent against the overall capacity decrease of 7 per cent.
On average, fuel costs were 13 per cent lower compared to the same period last year, largely due to a decrease in oil prices (down 9 per cent compared to same period last year), as well as a lower fuel uplift due to reduced capacity during 45-day runway closure at DXB.
Fuel remained the largest component of the airline’s cost, accounting for 32 per cent of operating costs.
Emirates carried 29.6 million passengers between April 1 and 30 September 2019, down 2 per cent from the same period last year.
However, passenger yield increased by 1 per cent period-on-period, the statement added.
Overall capacity during the first six months of the year declined to 29.7 billion available tonne kilometres (ATKM), mainly due to the DXB runway closure and reduction in fleet during the 45-day period.
Passenger traffic carried measured in revenue passenger kilometres (RPKM) was down by 2 per cent, while average passenger seat factor rose to 81.1 per cent.
Fleet, network changes
During the first six months of 2019-20, Emirates received three Airbus A380s, with three more new aircraft scheduled to be delivered before the end of the financial year.
It also retired six older aircraft from its fleet with a further two to be returned by March 31, 2020.
The carrier’s fleet stood at 267 aircraft including freighters as of end-September.
In terms of its network, Emirates added two new passenger routes: Dubai-Bangkok-Phnom Penh, and Dubai-Porto (Portugal). As of September 30, the airline’s global network includes 158 destinations in 84 countries.
The wider Emirates group, which includes the airline and travel firm Dnata, reported an 8 per cent rise in 2019-20 half-year net profit to reach Dhs1.2bn.
“The profit improvement was primarily due to the decline in fuel prices of 9 per cent compared to the same period last year, however the gain from lower fuel costs were partially offset by negative currency movements,” the company said.
Revenues reached Dhs53.3bn for the first six months of 2019-20, down 2 per cent year-on-year mainly due to “planned capacity reductions during the 45-day Southern Runway closure at Dubai International airport (DXB), and unfavourable currency movements in Europe, Australia, South Africa, India, and Pakistan”.
The group is adapting its strategies to “navigate the tough trading conditions and social-political uncertainty in many markets around the world”, said Sheikh Ahmed bin Saeed Al Maktoum, chairman and CEO, Emirates.
“Both Emirates and dnata worked hard to minimise the impact of the planned runway renovations at DXB on our business and on our customers. We also kept a tight rein on controllable costs and continued to drive efficiency improvement, while ensuring that our resources were deployed nimbly to capitalise on areas of opportunity,” he said.
“The lower fuel cost was a welcome respite as we saw our fuel bill drop by Dhs2bn compared to the same period last year. However, unfavourable currency movements wiped off approximately Dhs1.2bn from our profits.
“The global outlook is difficult to predict, but we expect the airline and travel industry to continue facing headwinds over the next six months with stiff competition adding downward pressure on margins,” he added.