Emirates records large profit amidst global meltdown
The Emirates Group has recorded its 28th consecutive year of profit and steady business expansion despite the global and operational challenges during this period.
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During the 2015-16 financial year, both Emirates and dnata, the ground handling subsidiary, achieved new capacity and profit milestones as the Group continued to expand its global footprint and strengthen its business through strategic investments.
The 2015-16 Annual Report indicated that Emirates Group posted an AED 8.2 billion (US$2.2 billion) profit for the financial year ending March 31, 2016 up by 50 per cent from last year.
The Group’s recorded US$ 25.3 billion (AED 93 billion) in revenues, down by three per cent results, although the Group cash balance increased strongly to US$ 6.4 billion (AED 23.5 billion). However, total operating costs decreased by eight per cent over the 2014-15 financial year.
The Chairman and Chief Executive, Emirates Airline and Group, Sheikh Ahmed bin Saeed Al Maktoum said, “Emirates and dnata delivered record profits, 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, the Group’s performance is testament to the success of our business model and strategies.
The airline recorded a profit of US$1.9 billion (AED 7.1 billion), an increase of 56 per cent over last year’s results.
Emirates’ SkyCargo division reported a revenue of US$3 billion (AED 11.1 billion), a decline of nine per cent over last year.
In its 57 years of operation, 2015-16 has been dnata’s most profitable yet, crossing US$287 million (AED 1 billion) profit for the first time.
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He added that Emirates’ ongoing investments to develop its people and enhance business performance enabled it to react with agility to the new challenges and opportunities that every year brought.
“In 2015-16, the Group collectively invested over US$ 4.7 billion (AED 17.3 billion) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies and staff initiatives. These will build on our strong foundations, extend our competitive edge and accelerate our progress towards our long-term goals.”
The Group’s employee base across its more than 80 subsidiaries and companies increased by 13 per cent to over 95,000-strong representing over 160 different nationalities.
Risks ahead
“Looking at the year ahead, we expect that the low oil prices will continue to be a double-edged sword – a boon for our operating costs, but a bane for global business and consumer confidence. The strong US dollar against major currencies will remain a challenge, as will the looming threat of protectionism in some countries.
However, we enter the new financial year with confidence, backed by a robust balance sheet, solid track record, diverse global portfolio and international talent pool. We will continue to evolve and grow our business profitably and work even harder to meet and exceed our customers’ expectations,” Sheikh Ahmed said.
In line with the overall profit, the Group declared a dividend of US$ 681 million (AED 2.5 billion) to the Investment Corporation of Dubai.
Emirates performance
Emirates’ total passenger and cargo capacity crossed the 56 billion mark to 56.4 billion Available Tonne kilometres (ATKMs) at the end of 2015-16, cementing its position as the world’s largest international airline.
Emirates received 29 new aircraft, its highest number during a financial year including 16 A380s, 12 Boeing 777-300ERs and one Boeing 777F, bringing its total fleet count to 251 at the end of March.
It also phased out nine aircraft, taking the average fleet age down to 74 months or approximately half the industry average of 140 months.
The airline’s fuel bill decreased by 31 per cent over last year to US$5.4 billion (AED 19.7 billion). Fuel now constitutes 26 per cent of the airline’s operating costs, down from 35 per cent in the 2014-15 financial year. It, however, remains the biggest cost component for the airline.
Carrying a record 51.9 million passengers (up 8%), Emirates crossed the 50 million passenger milestone and achieved a Passenger Seat Factor of 76.5 per cent, compared to the previous year’s 79.6 per cent.
Emirates SkyCargo continues to play an integral role in the company’s expanding operations, contributing 14 per cent of the airline’s total transport revenue.
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Emirates’ cargo division reported tonnage increases by six per cent to reach 2.5 million tonnes in an airfreight market that remained challenging with fast-changing demand patterns.
dnata performance
Building on its strong results in the previous year, dnata's revenue grew to US$2.9 billion (AED 10.6 billion).
dnata’s international business now accounts for more than 64 per cent of its revenue.
This substantial revenue increase of 16 per cent was achieved through organic growth, and bolstered by the first full year of Stella Group operations which dnata Travel acquired in October 2014 of the previous financial year, and airport operations in Australia which dnata fully acquired from its 50 per cent joint venture partner Toll in March 2015.
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Building on last year’s record levels of investment, dnata continued to lay the foundations for future growth by investing AED 585 million (US$ 159 million) into developing its people, facilities, technology and new acquisitions. GB