Nov. 10 (Bloomberg) -- Emirates Airline, the Dubai government-owned carrier that is the biggest customer for the Airbus SAS A380 airliner, said its six-month profit fell 88 percent on higher fuel costs.

The biggest Arab airline's net income for the period ended Sept. 30 declined to $77 million compared with $643 million a year earlier, the company said in an e-mailed statement today. Costs per kilometer increased 40 percent, with spending on fuel more than doubling to $2.5 billion from $1.1 billion.

``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 Chairman Sheikh Ahmed bin Saeed Al-Maktoum said in the statement.

Crude oil climbed to a record $147.27 a barrel on July 11, forcing some carriers to reduce flights and park planes after jet fuel costs surged 31 percent in the 12 months ended in September. Airlines, led by U.S. carriers, will offer 6 percent fewer flights this quarter to stem losses, according to an analysis by aviation data company OAG on Oct. 8.

Fuel Costs

Emirates based its budget for fuel for the financial year on $101 a barrel for crude oil, President Tim Clark told reporters last month. Emirates' fuel costs were $469 million higher than budgeted, the airline said.

Oil prices have plummeted 56 percent from the July record as the worsening global financial crisis threatens to restrain economic growth and curtail energy demand. Crude oil for December delivery was trading at $64.30 a barrel in electronic trading on the New York Mercantile Exchange today.

``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,'' Sheikh Ahmed said.

Emirates' cash position declined to $2.3 billion at the end of September from $3.4 billion a year earlier after it paid dividends to the Dubai government for 2007, as well as made pre- delivery payments for aircraft deliveries and the upgrade of its fleet. Operating revenue rose 31 percent to $6 billion, it said.

To contact the reporter on this story: Sean Evers in Dubai at evers@bloomberg.net Shaji Mathew in Dubai at shajimathew@bloomberg.net

Last Updated: November 10, 2008 06:55 EST