Emirates Group’s profit plunged 53 per cent to AED 1.1 billion ($296 million) in the first half of the 2018-19 financial year and it warned of a tough six months ahead.
The Dubai-based airline company said results were impacted by significant increase in fuel costs (up 37 per cent), unfavourable currency movements, and one-time transaction in dnata. However, group revenue was up 10 per cent to AED 54.4 billion in the period.
Emirates Airline saw profit decline a massive 86 per cent to AED 226 million despite revenue rising 10 per cent to AED 48.9 billion and the carrier welcoming 30.1 million passengers, up three per cent, on overall capacity expansion of three per cent.
dnata’s profit was up 31 per cent to AED 861 million including gain of AED 320 million from one-time transaction and revenue was up 11 per cent to AED 7.0 billion, with international operations accounting for over 68 per cent of this.
Without this transaction, the profit recorded would be down 18 per cent compared to last year. 350,052 aircraft were handled, up six per cent and 1.5 million tonnes of cargo was handled, up two per cent.
dnata’s flight catering operation, contributed AED 1.1 billion to its total revenue, up four per cent. The number of meals uplifted increased by two per cent to 31 million meals for the first half of the financial year.
Downward pressure on yields, particularly in its Australian operations, was offset by a healthy performance from its Alpha Group operations as well as higher meal volumes through increased business in the UK, Romania, Czech Republic and Sharjah (UAE).
Emirates Airline and Group chairman and chief executive, Sheikh Ahmed bin Saeed Al Maktoum said: “Demand for our high quality products and services remained healthy, as we won new and return customers across our businesses and this is reflected in our revenue performance. However, the high fuel cost as well as currency devaluations in markets like India, Brazil, Angola and Iran, wiped approximately AED 4.6 billion from our profits.
“We are proactively managing the myriad challenges faced by the airline and travel industry, including the relentless downward pressure on yields, and uncertain economic and political realities in our region and in other parts of the world.
“We are keeping a tight rein on controllable costs and will continue to drive efficiency improvement through the implementation of new technology and business processes.
“The next six months will be tough, but the Emirates Group’s foundations remain strong. I’m pleased to note that our home and hub in Dubai continues to attract travel demand, as the airline saw 9% more customers enjoying Dubai as a destination in the first half of 2018-19 compared to the same period last year.
“We expect this demand to remain healthy as new attractions come online and the city gears up for Dubai Expo 2020. Moving forward we are firmly focussed on sustaining our business. We will do this by being agile to capitalise on opportunities, and investing to serve our customers even better with high quality products that they value.”