The Emirates Group has announced its 20th consecutive year of net profit, notching a new profit record despite soaring oil prices and challenging business conditions in the second half of its 2007-08 fiscal year.
Group net profits increased 54.1 per cent to AED 5.3 billion (US$ 1.45 billion) for the financial year ended 31st March 2008, on revenues of AED 41.2 billion ($ 11.2 billion) compared to the previous year’s AED 31.1 billion ($ 8.5 billion). The group net margin improved to 13.2 per cent from 11.4 per cent in the previous year.
The group also retained a robust cash balance of AED 14.0 billion ($ 3.8 billion), compared with AED 12.9 billion ($ 3.5 billion) the previous year. Emirates will pay a dividend of AED 1 billion ($ 272.5 million) to its owner, the Government of Dubai. In 2007-08, the group estimates a direct contribution of AED 22 billion ($ 6 billion), and another AED 25 billion ($ 6.8 billion) in indirect contribution to the UAE economy.
The 2007-08 Annual Report of the Emirates Group – comprising Emirates Airline, Dnata and subsidiary companies – was released in Dubai at a news conference hosted by Sheikh Ahmed bin Saeed Al-Maktoum, chairman and chief executive, Emirates Airline and Group.
The group’s latest record performance reflects its success in growing customer demand through the strategic expansion of its business operations across six continents, supported by ongoing investments in the latest technology, products and customer service while keeping a tight rein on costs. This is illustrated by the 21.2 million passengers who flew with Emirates in the latest financial year, 3.7 million more than in the previous year; as well as the expansion of Dnata’s international ground handling operations to 17 airports in seven countries.
Fuel costs remained the top expenditure for the 4th year running, accounting for 30.6 per cent of total operating costs compared with 29.1 per cent the previous year and 27.2 per cent the year before.
The airline’s fuel risk management programme continued to reap rewards, saving the company AED 888 million ($242 million) in 2007-08, as WTI crude oil prices hovered around the US$ 90 per barrel mark in the second half of the fiscal year, 50 per cent more than US$ 60 per barrel in the same period the year before. In total, the fuel risk management has saved in excess of AED 3.7 billion ($ 1 billion) since the financial year 2000-01.
In his opening review in the 2007-08 Annual Report, Sheikh Ahmed highlighted some major milestones for the group which included the move of most of the company’s Dubai-based staff to the new Emirates Group Headquarters; the launch of 11 new passenger and freighter destinations across the globe including Emirates’ first South American destination; and the massive 2007 Dubai Air Show aircraft order which has been described as the largest in civil aviation history worth US$ 34.9 billion at list prices.
He also noted that the continued ability to attract and retain the best talent for the company’s growing requirements will be one of the Group’s biggest challenges.
He said: “As we plan for the next decade, our biggest challenges will be to find more pilots, engineers, cabin crew and skilled staff across our various business units. Fortunately, Emirates has thus far been a strong employer brand, with more than three million unique visitors browsing job opportunities on our online recruitment website last year, from which we received over 288,000 applications for positions within the Group. Being based in Dubai also has its advantages as the city itself is already preparing to welcome 15 million visitors by 2010 and there is massive investment in infrastructure to serve and attract the increasing number of expatriates.”
He also reiterated the Emirates Group’s support for Dubai’s new low-cost airline, which has been established as a separate entity from the Emirates Group; and remarked on competition in the region, saying: “This is a big cake and admittedly, Emirates has a big slice of it, but there is plenty for the other airlines and we welcome them to the region.”
Emirates Airline’s revenues totalled AED 39.5 billion ($ 10.8 billion), an increase of 32.3 per cent from AED 29.8 billion ($ 8.1 billion) the previous year. Airline profits of AED 5 billion ($1.37 billion) marked a 62.1 per cent increase over 2006-07’s record profits of AED 3.1 billion ($844 million).
This result was due to improved yields and higher load factors on increased capacity; as well as other operating gains.
In 2007-08, the airline’s fleet expanded with 11 new Boeing 777s delivered, including Emirates’ first 777-200LR passenger aircraft. At the end of the financial year Emirates’ fleet reached 114 aircraft, including 10 freighters, boasting an average age of 67 months – one of the youngest commercial fleets in the skies.
The record aircraft order at the 2007 Dubai Air Show brings Emirates’ total order book, excluding options, to 182 aircraft at the end of March 2008, worth approximately US $58 billion.
During the year, the airline launched passenger services to seven new destinations – Newcastle, Venice, Sao Paulo, Ahmedabad, Toronto, Houston and Cape Town – and strengthened its existing network by adding services onto existing routes most notably to high-demand cities in China, India, Middle East and Africa.
Passenger seat factor increased to 79.8 per cent from 76.2 per cent the previous year. Traffic increased faster by 16.6 per cent to 14,739 million tonne kilometers as compared to the capacity increase of 13.7 per cent to 22,078 million tonne kilometers. While yield improved for the sixth consecutive year to 236 fils (64 US cents) per RTKM (Revenue Tonne Kilometre), up from 216 fils (59 US cents) in 2006-07; high jet fuel prices and rising costs drove breakeven load factor up to 62.7 per cent from 59.9 per cent last year.
Emirates SkyCargo performed well in what was a turbulent year for the air cargo industry, marking healthy revenue and tonnage carried despite high fuel prices, a U.S. slowdown from the sub-prime crisis, and bad weather affecting agricultural production in key areas. The division carried 1.3 million tonnes of cargo, an improvement of 10.9 per cent over the previous year’s 1.2 million tonnes and recorded a revenue increase of 20 per cent to AED 6.4 billion ($ 1.8 billion), up from AED 5.4 billion ($ 1.5 billion) in 2006-07.
Cargo revenue contributed 19 per cent to the airline’s total transport revenue, yet again one of the highest contributions of any airline in the world with a similar fleet. During the year, Emirates SkyCargo introduced freighter-only destinations to Djibouti, Hahn, Toledo and Zaragoza. At the end of the financial year, the freighter fleet was 10 aircraft – five leased and five owned. In all, Emirates SkyCargo carried freight in 114 aircraft, including bellyhold space in the passenger fleet, to 99 cities on six continents.
Dnata recorded strong revenue growth of 27.2 per cent to AED 2.6 billion ($718 million), compared with AED 2.1 billion ($565 million) the previous year. Profits reached AED 305 million ($83 million) despite a challenging year for airport and cargo operations with ongoing construction at Dubai airport and peak traffic congestion.
As Dnata moves into its 50th year of operation in 2008, it remains at the core of Dubai’s rapid traffic growth, handling 119,510 aircraft (up nine per cent), 35.6 million passengers (up 18.4 per cent), and 632,549 tonnes of cargo (up 18.2 per cent).
During 2007-08, Dnata continued to expand its international ground handling operations, investing in ground handling businesses in Switzerland, Australia and China, to bring its reach to 17 airports in seven countries. It opened FreightGate-5 in Dubai Airport Freezone to handle premium freight, and also saw operations at Dubai Terminal 2 increased with the opening of a 37,000 square foot extension that will serve 700 more flights per week and an annual throughput of approximately 5 million passengers.
As of 31st March 2008, the Group employed 35,286 staff, representing 145 different nationalities. During the year, the Group hired more than 7,000 people including some 2,000 cabin crew and 400 new flight deck crew.
For the full report and accounts, visit: www.ekgroup.com.
Photo: Sheikh Ahmed bin Saeed Al-Maktoum