Emirates, the world’s largest airline by international traffic, said full-year profit fell 61 percent as fuel costs rose and growth in European economies slowed.
Net income in the 12 months ended March 31 dropped to 2.31 billion dirhams ($629 million) from 5.95 billion dirhams a year earlier, the Dubai-based company said today in its annual report. Revenue increased 18 percent to 67.4 billion dirhams.
Airline-industry profit will probably drop 62 percent to $3 billion in 2012, the International Air Transport Association estimates. Emirates boosted annual passenger numbers 8 percent and its planes flew with four-fifths of seats occupied even as it builds the largest fleet of Airbus SAS A380 superjumbos in a bid to establish Dubai as a long-haul hub and win customers from rivals including Air France-KLM (AF) Group and Deutsche Lufthansa AG. (LHA)
“Emirates is no more immune to rising fuel costs than any other airline, but what’s impressive is that it has managed to remain profitable and all the commercial indices remain high, revenues and traffic rising and load factors robust,” said John Strickland, an analyst at JLS Consulting Ltd. in London.
Net income at the main airline unit fell 72 percent to 1.5 billion dirhams, with the fuel bill up 44 percent to a record 24.3 billion dirhams, Emirates said in a separate release. The price of Brent crude (CO1:US) rose 49 percent in the fiscal second half, averaging $108 a barrel, data compiled by Bloomberg show.
“Our most significant challenge was the high price of jet fuel,” Emirates Chairman Sheikh Ahmed Bin Saeed Al-Maktoum said in the report. “Had prices remained the same as last year our annual net profit would have again soared to a new record high.”
The economic environment was hampered by the on-going euro- zone debt crisis and a slowly rebounding global economy, the carrier said, and earnings were also clipped by the grounding of A380s after the discovery of wing cracks. Six of the jets, which generate $50,000 an hour, 15 hours a day for Emirates, have been out of action for repairs as part of a rolling program, idling 830 cabin crew and 160 pilots not qualified on other models.
The carrier, which competes with fellow Gulf operators Qatar Airways Ltd. and Abu Dhabi-based Etihad Airways, operates 21 superjumbos with 69 more on order and is also having to compensate people who were set on an A380 trip.
Emirates increased its annual passenger total to 34 million, it said today, with the load factor, a measure of seat occupancy, little changed at 80 percent. The company added 11 routes and increased frequencies on 34 others while recruiting 10 percent more staff and introducing 22 new aircraft.
The airline now operates to 123 cities in 73 countries and has this year commenced flights to Rio de Janeiro, Buenos Aires, Dublin, Dallas and Seattle, together with Lusaka in Zambia and Harare in Zimbabwe. Barcelona, Lisbon, Washington and Ho Chi Minh City in Vietnam will follow in coming months.
The fleet features 172 Airbus and Boeing Co. (BA:US) jets, among them the largest number of the U.S. manufacturer’s 777 wide- bodies, with around 231 on order worth more than $84 billion.
Earnings at ground-handling unit Dnata rose 40 percent to a record 808 million dirhams as sales rose 59 percent to 7 billion dirhams. The world’s No. 4 air-services provider said Jan. 3 it had acquired a majority stake in U.K. online travel agent Travel Republic after taking a 50 percent holding in South African in- flight caterer Wings Inflight Services a month earlier.
Cargo volumes grew by 1.6 percent to 1.8 million metric tons, according to the statement, while the company’s cash balance grew 9.5 percent to 17.6 billion dirhams.
To contact the reporter on this story: Tamara Walid in Dubai at firstname.lastname@example.org
To contact the editors responsible for this story: Chad Thomas at email@example.com