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Emirates Profit Surges Fivefold to $964 Million on Cost Cuts, Fuel Prices

Emirates, the biggest Arab airline, said it expects to fly 15 percent more passengers this year after reporting a more than fivefold jump in annual profit on cost cuts, lower fuel prices and productivity gains.

Net income in the 12 months to March 31 advanced to $964 million from $187 million in the previous year, the Dubai government-owned carrier said in an e-mailed statement today. Revenue rose 0.4 percent to $11.8 billion, while the number of passengers increased 21 percent to 27.5 million.

“We had the airline growing capacity by 20 percent, we were able to maintain costs where they were,” Emirates President Gary Chapman said today in an interview in Dubai. “We’re going to be about 15 percent higher in terms of capacity and passengers carried” this year, he said.

Air travel demand in the Gulf Arab region is surging as economic growth accelerates, fuelled by strong oil prices and rising investments. International air traffic in the Middle East grew 25 percent in first three months of 2010 from a year ago, according to the International Air Transport Association.

Emirates, which competes with carriers including British Airways Plc and Singapore Airlines Ltd. for intercontinental traffic between Asia, Europe and the Americas, has firm orders worth more than $48 billion that would nearly double its fleet of 146 Airbus SAS and Boeing Co. planes. The company is the biggest customer for Airbus’s double-decker A380, with an initial order for 58.

New Planes

Emirates will receive eight new planes this year including seven Airbus A380s, Chairman Sheikh Ahmed Bin Saeed Al Maktoum said at a news conference in Dubai today. The carrier is talking to Airbus and Boeing about additional orders and will make an announcement in around eight weeks, Sheikh Ahmed said.

Profit at Emirates Group, which also includes ground handling and cargo services company Dnata, more than tripled to $1.1 billion. Emirates had a cash balance of $3.4 billion at the end of March while its seat factor, or the average number of seats filled, rose to 78.1 percent from 75.8 percent.

Chapman said it is difficult to forecast profit for this year because of changing fuel prices and exchange rates. “Currency fluctuations will have an impact on yield. A lower euro, lower sterling will not be good for our yield because we are dollar-denominated,” he said.

The disruptions caused by the eruption of an Icelandic volcano cost Emirates $10 million a day and grounded a fifth of its fleet, the airline said in April.

To contact the reporters on this story: Arif Sharif in Dubai at asharif2@bloomberg.net

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