A few day ago, Emirates reported its financial results for the first six months of 2017, posting an impressive profit of $452 million USD – up a staggering 111% on last year. Yet despite the optimistic results, even Emirates admits the future will still be tough. In an internal memo, the airline described the past year as being “tough on us all”.
The threats of increased competition, terrorism and political spats continue to affect the business although higher oil prices and a weaker U.S. Dollar are a welcome boost for the airline. Nonetheless, cash reserves have fallen by 6% to $5.2 billion USD and a project to slash costs is ongoing.
“Moving forward, we will continue to keep a careful eye on costs while investing to grow our business and provide our customers with world-class products and services,” said Sheikh Ahmed bin Saeed Al Maktoum, the Chairman and Chief Executive, Emirates Airline.
He attributed the positive results to the hard work of a “talented workforce” who had addressed “challenges without compromising on quality and service.”
The financial report was peppered with some really positive signs of a recovery, including:
- Passenger numbers increased 4% to 29.2 million.
- The load factor (how full a plane is) rose to an average of 77.2% – up 2.2%
- Capacity increased by around 3%
Emirates said much of the increase in revenues was down to “improved seat load factors, tight control on capacity deployment, and the strengthening of currencies in Emirates’ key markets against the US dollar.”
But while an increasing oil price is good for driving premium passengers to the airline, it is a double-edged sword. Fuel costs have risen by 14% – by far the largest expense for Emirates and there’s no sign those costs will fall anytime soon.
Of course, Emirates is investing heavily in its fleet and in the last couple of weeks, the airline took delivery of its 100th Airbus A380. A total of 10 new aircraft were delivered in the first 6 months of the financial year and a further 9 are due to be delivered before April 2018. Emirates now operates a huge fleet of 264 aircraft that fly to 156 destinations in 84 countries.
But Sheikh Al Maktoum is quick to caution about the risks that lay ahead, confirming that cost-cutting will continue: “Moving forward, we will continue to keep a careful eye on costs,” he commented.
Redunancies and recruitment ‘slowdown’
We already knew that Emirates didn’t pay out a profit sharing bonus this year and employees haven’t seen any pay raises either. But new revelations, expose the news that Emirates’ workforce shrunk by over 3,000 people in the last year.
The airline says this was mostly down to a recruitment ‘slowdown’ and ‘natural attrition’ although Emirates does finally admit to making some employees redundant. Going forward, the airline is continuing to encourage employees to take unpaid leave and “non-essential recruitment” has been “stripped away”.
The rising oil prices, despite being a significant cost to Emirates will be a very welcome boost for the airline. Tomorrow, we’ll see Emirates unveil its brand new First Class suite and possibly even announce a new aircraft order. The future is looking more positive but Emirates isn’t quite out of the woods just yet.