(Updates with fuel costs and cargo volumes in sixth paragraph, new routes in eighth.)
Nov. 3 (Bloomberg) -- Emirates, the world’s biggest airline by international traffic, said first-half profit tumbled 76 percent as fuel costs surged and it added widebody planes faster than demand increased, depressing occupancy levels.
Net income in the six months ended Sept. 30 declined to 827 million dirhams ($225 million) from 3.39 billion dirhams a year earlier, the Dubai-based company said in a statement today.
Industrywide profit will drop by more than half this year and 40 percent in 2012 as a slowing economy hurts bookings, the International Air Transport Association predicts, with the slump coming as Emirates builds the world’s largest fleet of Airbus superjumbos to establish Dubai as a long-haul travel hub and win passengers from Air France-KLM Group and Deutsche Lufthansa AG.
“The global challenges of the past six months have again put Emirates to the test,” Chairman Sheikh Ahmed bin Saeed Al Maktoum said, citing an “unsteady marketplace.” The Gulf carrier won’t be deflected from its long-term expansion plan, he said.
Emirates increased capacity 8.2 percent in the six months, faster than the 5.7 percent increase in traffic, pushing the average load factor -- a measure of seat occupancy -- down to 79.3 percent from a record 81.2 percent a year earlier. It also added 3,400 more staff during the period.
The fuel billion jumped by $1 billion, with fluctuating exchange rates also clipping earnings. Sales rose 16 percent to 29.9 billion dirhams, though much of the gain came in surcharges used to pass on the kerosene costs. Cargo volumes were flat.
The state-owned carrier has 90 Airbus SAS A380s on order after last year agreeing to add a further 32 with a list price of $11 billion, and is targeting a total of 120. It had 17 superjumbos in service at the end of October, making it the No. 1 operator, and also has the largest fleet of Boeing Co. 777s.
Emirates has commenced routes to Geneva, Copenhagen and St. Petersburg, Russia, since April and will add eight more in the next few months, flying to Baghdad from Nov. 13 and Rio De Janeiro, Buenos Aires, Dallas, Seattle, Dublin and Lusaka in Zambia and Harare in Zimbabwe starting in early 2012.
The overall fleet features 161 Airbus and Boeing jets, including 10 planes delivered this fiscal year, with around 190 on order worth in excess of $60 billion, 13 of which are due to arrive by March 31.
--Editors: Chris Jasper, Chad Thomas.
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