Emirates Fleet Growth Spurs Profit as Order Splurge Looms
Emirates, the Gulf carrier said to be planning the biggest-ever jet deal at next week’s Dubai air show, boosted first-half profit 4 percent after adding 10 wide-body planes from its existing order book.
Net income at the group, based in the sheikdom that hosts a biennial aviation expo starting Nov. 17, reached 2.2 billion dirhams ($599 million) in the six months to Sept. 30 as sales advanced 13 percent to 42.3 billion dirhams, it said today.
Already the world’s biggest international carrier, Emirates is likely to dominate at the Dubai show with what President Tim Clark has said could be an “enormous” order for Boeing Co. (BA)’s new 777X model, together with follow-on contracts for the A380 superjumbo. Sheikh Ahmed bin Saeed Al Maktoum, the company’s chairman, said today that high fuel prices, a sluggish global economy and currency changes that have weighed on earnings won’t deflect it from the industry’s most ambitious growth strategy.
“While we keep a close watch on managing our immediate business targets, we never lose sight of our long-term goals, and that is why we continue to invest to build the business,” Sheikh Ahmed said in a statement.
Emirates took delivery of six Airbus SAS double-decker A380s and three of Boeing’s current-generation 777s in the six months, adding more than 4,000 seats, plus a sole 777 freighter, swelling what were already the biggest fleets of the two models.
The passenger total rose 15 percent to 21.5 million, while the load factor -- a measure of seat occupancy -- was barely changed at 79.2 percent.
The Gulf carrier, which has exploited Dubai’s geographical position to turn its home base into a hub for intercontinental travel linking Europe and the Americas with the Asia-Pacific and Africa, is scheduled to take delivery of a further 15 aircraft before the end of its financial year next March.
Emirates added five destinations in the first half -- Tokyo Haneda, Stockholm, Clark airport in the Philippines, Conakry in Guinea and Sialkot in Pakistan -- and plans to open up routes including Kiev, Taipei, Kabul and Boston in the current period. As of September, the carrier served 133 cities with 205 planes.
Earnings at the main airline unit rose 2 percent to 1.75 billion dirhams amid what Sheikh Ahmed said is a “challenging” global business environment. Fuel costs remain high, accounting for 39 percent of spending, and unfavorable exchange rates “continue to eat into our profits,” he said. Ground-handling unit Dnata boosted earnings 13 percent to 458 million dirhams.
The results are positive given the pace at which Emirates is adding routes, which take time to reach maturity, John Strickland, director of London-based aviation advisory JLS Consulting Ltd., said in an e-mail.
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