Emirates reports a fiscal year profit decline of 82.5%
Dubai’s Emirates Airline has blamed fierce competition, currency devaluations and “destabilizing events” as it reported an 82.5% slump in annual profits to March 31. Read More » The Gulf aviation giant said it expected "the year ahead to remain challenging".
Emirates’ net profit at its airline business slipped to US$340 million in the past financial year, a steep drop from $1.9 billion in the previous year. It was the carrier’s first decline in annual profit for five years.
The fall was the result of the greenback’s "relentless rise" against currencies in its key markets and pressure on fares and yields forced on the carrier by stiff competition, the airline said.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group, also pointed to "destabilising events which have impacted travel demand during the year", including Brexit, terror in Europe and the Trump administration’s restrictions on Middle East-U.S. travel.
Emirates earlier this month started reducing frequencies to five of its 12 U.S. destinations. It called the move “a commercial decision in response to weakened travel demand” since Trump took office. Specifically, Dubai to Boston, Los Angeles and Seattle were reduced from twice daily to daily and Dubai to Fort Lauderdale and Orlando were cut from daily to five-weekly.
“The recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting, and restrictions on electronic devices in aircraft cabins have had a direct impact on consumer interest and demand for air travel into the US,” the Tim Clark-led carrier said. Emirates added that its flights to the U.S. saw “healthy growth” through to the end of 2016, but since then “a significant deterioration in the booking profiles on all U.S. routes, across all travel segments” has taken place.
But it could get even worse: Orient Aviation understands U.S. agencies are very seriously considering the expansion of the electronics ban to all flights originating in Europe. This would obviously affect Europe’s fragile carriers, but also Emirates’ fifth freedom routes from Milan and Athens to the U.S.
In the 12 months to March 31, Emirates carried a record 56.1 million revenue passengers, an 8% year-on-year improvement, which it said showed “the consumer’s desire to fly on Emirates’ state of the art aircraft and on efficient routes through its Dubai hub”.
Load factor decreased to 75.1% on “lingering economic uncertainty and strong competition in many markets”, Emirates said.