DUBAI, U.A.E., 21st May 2009 – The Emirates Group has reported its 21st consecutive year of net profit for its 2008-09 financial year despite unprecedented challenges for the airline and travel industry.
The Group’s net profit of AED 1.49 billion (US$ 406 million) for its financial year ending 31st March 2009, was down 72 per cent from the previous year’s record profits of AED 5.3 billion (US$1.45 billion), showing the impact of the record fuel prices in the first six months of the year, and the impact of the global recession.
At the same time, Group revenues of AED 46.3 billion ($ 12.6 billion), representing an increase of 10.4 per cent over the previous year’s AED 41.9 billion ($ 11.4 billion), reflects continued business growth.
The Group also retained a healthy cash balance of AED 8.7 billion ($ 2.4 billion) compared with AED 14 billion ($ 3.8 billion) the previous year. This cash position is after funding new aircraft orders, new construction projects to build a twin tower hotel and staff accommodation, dividends paid to the company’s owners, and massive product and service investments including the hundreds of millions of dollars invested to develop dedicated Emirates Lounges across the network and retrofitting aircraft to align the interiors across the young fleet.
In 2008-09, the Group estimates a total contribution of AED 58.8 billion ($ 16.0 billion) to the UAE economy.
HH Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group said: “We have returned our 21st consecutive year of net profit, and although it is a 72 per cent decrease on the previous year’s all-time record profit, under the circumstances this is a satisfactory result.”
The Group’s performance this year demonstrates its flexibility in a challenging economic period, and its ability to strategically grow its business and customer demand. During the year, the company strengthened its operations with investments in technology, new products and customer service, while keeping a tight rein on costs.
The past year saw the first six months posting record fuel prices with oil rising to US$147 (AED 540) a barrel, and then a decrease in demand from the weakened global economy was followed by declining yields with the strengthening US Dollar against major currencies, which all contributed to lower profitability and lower net margin for the Group at 3.3 per cent, compared to 13.2 per cent in the previous year.
Fuel costs remained the top expenditure for the 5th year running, accounting for an unprecedented 36.2 per cent of airline operating costs compared with 32.9 per cent the previous year.
Sheikh Ahmed commented: “No one could have predicted the scale of the worldwide recession which is now impacting every country on earth. Emirates has worked hard to cope with this downturn by maintaining our agility and responsiveness in a volatile economic environment.
“We have met these challenges with determination, improved efficiencies and innovative market-leading initiatives. In 2008-09 financial year, our group achieved two significant milestones: Emirates accepted delivery of its first A380 heralding a new era in our eco-efficient aircraft fleet with Dnata playing a significant role in developing the ground handling processes to manage this pioneering aircraft; and we witnessed the smooth opening of the state-of-the-art Terminal 3 at Dubai International Airport - a remarkable new facility dedicated to Emirates operations, with Dnata overseeing the ramp operations and managing the state of the art baggage system.”
He added: “As we move into the new financial year, the outlook is not improving. Although fuel prices are dropping, demand for business and first class traffic is still weak in many markets. Without downplaying the global economic situation and its challenges for our business, I still believe that the coming year will be one of satisfactory growth for the Emirates Group.
“Our development plans remain unchanged. We have weathered the last twelve months with satisfactory growth, maintained the quality of our award-winning service, and maintained staff numbers in the face of an unsettled future. We will continue to forge ahead to build the airline, Dnata and the many subsidiary companies that are part of the Emirates Group.”
Sheikh Ahmed also reinforced the airline’s plans to continue taking delivery of 18 new aircraft in the coming year, saying: “We will progress with our fleet and route expansion plans. With our strong business fundamentals and track record, we have had no problems securing financing for our growth. In fact, to date we have already secured financial commitments for over half of our aircraft deliveries in the coming year.”
Emirates airline’s revenues totalled AED 44.2 billion ($ 12.0 billion), an increase of 9.9 per cent from AED 40.2 billion ($ 10.95 billion) the previous year. Airline profits of AED 982 million ($268 million) marked an 80.4 per cent decrease over 2007-08’s record profits of AED 5.0 billion ($1.37 billion).
In 2008-09, the airline’s passenger fleet expanded with the delivery of four Airbus A380s, ten Boeing 777 300ERs, and six Boeing 777 200LRs. At the end of the financial year Emirates’ fleet reached 132 aircraft, including eight freighters, boasting an average age of 64 months – one of the youngest commercial fleets in the skies.
At the end of the year, the total number of aircraft on Emirates’ order book, excluding options, was 161 aircraft, worth approximately US $ 52 billion.
During the year, the airline launched passenger services to four new destinations - Kozhikode (Calicut), Guangzhou, Los Angeles and San Francisco – and increased frequencies onto existing routes in high-demand markets.
Passenger Seat Factor, at 75.8 per cent, was a strong result given there was also a seat capacity (ASKMs) increase of 13.4 per cent. Overall traffic (passenger and cargo) increased by 7.7 per cent to 15,879 million tonne kilometres as compared to the overall capacity increase of 10.5 per cent to 24,397 million tonne kilometres (ATKMs).
Yield improved by 8.4 per cent to 256 fils (69.8 US cents) per RTKM (Revenue Tonne Kilometre), up from 236 fils (64.4 US cents) in 2007-08 marginally ahead of growth in unit costs that grew by 8.2 per cent from higher fuel and operating expenses. These helped to improve the break even load factor down to 63.9 per cent from 64.1 per cent last year.
Emirates continued to enhance its products in the air and on the ground, completing the refurbishment of its Boeing 777 classic aircraft with its new First, Business and Economy Class seats, as well as the latest ice inflight entertainment system with over 1,000 channels on-demand.
On the ground, Emirates Airport Services were highly involved in the development and opening of Terminal 3 at Dubai International. At JFK, Emirates Airport Services completed the construction of a customised airbridge providing direct access from the Emirates Lounge to the aircraft. In addition, the division opened lounges at Beijing, Dusseldorf, Johannesburg, Mumbai and Zurich airports, taking the number of lounges in the Emirates network to 20 with three more planned.
Skywards, Emirates’ frequent flyer programme, welcomed its 4 millionth member over the course of the year with a new member enrolling every 41 seconds.
The airline’s internet and e-commerce gateway, www.emirates.com, was recreated in a format tailored for easy access on mobile devices, making Emirates booking and flight management facilities available to customers on the move.
Emirates SkyCargo produced a growth performance despite high fuel prices in the first half of the year and the global economic slump which had significant impact on world trade and shipping patterns. The division carried 1.4 million tonnes of cargo, an improvement of 9.8 per cent over the previous year’s 1.3 million tonnes helping revenue to increase by 14.8 per cent to AED 7.7 billion ($ 2.1 billion), up from AED 6.7 billion ($ 1.8 billion) in 2007-08.
Cargo revenue contributed 19 per cent to the airline’s total transport revenue.
Emirates SkyCargo took delivery of its first 777 freighter at the end of the financial year, bringing the total freighter fleet to eight aircraft – including seven 747Fs, and the new 777F operated by Emirates. In all, Emirates SkyCargo carried freight in 132 aircraft, including bellyhold space in the passenger fleet, to 99 cities on six continents.
The Destination & Leisure Management division of Emirates airline maintained sales of AED 1.4 billion ($373 million), in line with the preceding year’s performance, despite challenges from global economic downturn. Arabian Adventures and Emirates Holidays cared for a total of 349,104 tourists, Arabian Adventures played host to 267,600 visitors to Dubai over the year, while Congress Solutions International arranged major global summits on behalf of the World Travel and Tourism Council and the World Economic Forum and the government of Dubai.
In October 2009, Emirates Hotels & Resorts will open its conservation-based Wolgan Valley Resort & Spa in Australia’s Blue Mountains, and in Seychelles’ Cap Ternay Resort & Spa is slated to open in 2011-12.
Dnata achieved a 22 per cent increase in revenue to AED 3.25 billion ($886 million), compared with AED 2.67 billion ($727 million) the previous year. Profits increased 66.4 per cent to reach AED 507 million ($138 million) despite a testing year from increased activity.
Dnata continues to play a major role in the Group's growth by handling a record 244,516 aircraft (up 2.3 per cent on last year), over 37 million passengers (up 5.7 per cent), and 627,352 tonnes of cargo (down 0.8 per cent).
During 2008-09, Dnata International continued to expand its ground handling operations to bring its reach to 17 airports in seven countries.
Dnata Cargo successfully launched CALOGI, a pioneering web-based cargo services portal- the most comprehensive package development currently available in the cargo industry and the biggest and most compliant IATA e-freight compliant solution available today.
Dnata Travel Services opened the 50th outlet this year, coinciding with its 50th anniversary of operations. The division also opened Afghanistan's first-ever full-service travel shop in Kabul in partnership with Dunya Travel. Dnata this year also invested in the Hogg Robinson Group acquiring 23 per cent of the travel company’s stock. Hogg Robinson Group UAE increased sales by 14 per cent launching new outlets in Dubai.
Over the last five years, Dnata has grown its revenue by 10 per cent compound. Looking ahead, Dnata expects overall growth for its business to continue in the single digit figures for the next two years.
The Group’s close co-operation with Whitbread Plc continues with some 65 Costa outlets in the UAE, the largest number in any country outside of the United Kingdom. The joint venture between the two companies also saw the first Premier Inn opened in Dubai in April 2008, the second in May 2009, and the third due for completion in November 2009.
As of 31st March 2009, the Group and its subsidiaries employed 48,246 staff, representing 145 different nationalities. During the year, the Group hired more than 7,000 people from over 250,000 job applications received from around the world.
The full 2008-09 Report and Accounts of the Emirates Group – comprising Emirates airline, Dnata and subsidiary companies – is available on www.ekgroup.com/mediacentre