Emirates Posts Record Profit as Superjumbos Lure Passengers
Emirates Posts Record Full-Year Net as A380s Lure Passengers
Jeremy Bales/Bloomberg
The Middle East’s biggest carrier is building the largest superjumbo fleet.
The Middle East’s biggest carrier is building the largest superjumbo fleet. Photographer: Jeremy Bales/Bloomberg
May 10 (Bloomberg) -- Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates, the world’s biggest airline by international traffic, talks about the outlook for air travel and international competition. He speaks with Bloomberg’s Lara Setrakian in Dubai. (Source: Bloomberg)
Emirates, the world’s biggest airline by international traffic, said annual earnings surged 43 percent to a record as it attracted more passengers using a growing fleet of Airbus SAS A380 superjumbos.
Net income in the year ended March 31 rose to 5.93 billion dirhams ($1.6 billion) from 4.15 billion dirhams a year earlier, the Dubai-based company said today. Profit at the main airline division jumped 52 percent to 5.37 billion.
The Middle East’s biggest carrier is building the largest superjumbo fleet as it seeks to establish Dubai as an inter- continental travel hub and win passengers from Air France-KLM (AF) Group and Deutsche Lufthansa AG. (LHA) It’s also fending off local challengers Qatar Airways and Abu Dhabi’s Etihad, and redeployed capacity amid unrest in Arab states and the Japanese earthquake.
“The record results reflect their excellent geographic position, good product and strong management, which shows great flexibility in adapting to current market challenges,” said John Strickland, an aviation analyst at JLS Consultancy.
State-owned Emirates may announce more plane orders at the Dubai Air Show in November but is unlikely to place contracts for jets at the Paris event next month, Chairman Sheikh Ahmed bin Saeed al-Maktoum said at a press conference in Dubai.
A380 Plans
Emirates has 90 A380s on order after last year agreeing to buy a further 32 with a list price of $11 billion, and is targeting 120. The company currently has 15 superjumbos in the fleet and will receive six more this fiscal year.
“We continue to be the largest A380 operator and we have exciting expansion plans for the coming year,” Sheikh Ahmed said. “We will always find new and open routes to be able to maintain profitability.”
The airline will add services to Geneva, Copenhagen, Rio de Janeiro and Buenos Aires this year and will announce others soon, the chairman said.
The fleet of 152 Airbus and Boeing Co. (BA) aircraft will reach 169 by 2012, with the 200-strong order book worth in excess of $68 billion, excluding options, according to Emirate’s website. President Tim Clark has said that the only restriction on growth is airport space.
Having coped with a “challenging year” that also featured airport closures due to a volcanic ash cloud and heavy snowfalls in some of its biggest markets, Emirates aims to maintain growth of 10 percent or more this year and next, Sheikh Ahmed said.
Sales Surge
Group sales surged 26 percent to 57.4 billion dirhams in the year as Emirates flew 31.4 million people, up 14 percent. The load factor, or proportion of seats filled, was 80 percent and cargo revenue rose 28 percent to 8.6 billion dirhams.
“Our financial year has started with a few challenges, with shifting fuel prices and regional instability,” Sheikh Ahmed said. Emirates would have achieved net income of 7 billion dirhams in the year were it not for fuel costs, he said, adding that a reasonable oil price for the industry would be between $80 and $90 a barrel, compared with the current $100-plus.
Airlines stand to earn almost 50 percent less this year than in 2010 as rising oil prices limit the benefits of a rebounding economy, the International Air Transport Association predicted in March. IATA cut its forecast for industry profit to $8.6 billion from the $9.1 billion projected earlier.
Emirates paid a dividend of 2 billion dirhams to the Dubai government for the year, the most to date, Sheikh Ahmed said, though a bond issue was postponed after borrowing costs rose.
“In the last month we said we might tap the market for bonds or sukuk issuance and then saw the prices were too high so we stopped,” he said. “When the market improves we can tap it.”
The company’s cash of 16 billion dirhams is a “nice cushion to have,” the chairman said.
To contact the reporter on this story: Tamara Walid in Abu Dhabi at twalid@bloomberg.net
To contact the editors responsible for this story: Chad Thomas at cthomas16@bloomberg.net; Benedikt Kammel at bkammel@bloomberg.net
Rate this Page