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Emirates Profits Drop by 82% after “Brutal” Year

Emirates Profits Drop by 82% after “Brutal” Year

Emirates Profits Drop by 82% after "Brutal" Year

Profits at Dubai-based airline, Emirates have dropped a massive 82% in what the carrier has described as a “brutal” year.  The newly published results for 2016/2017 show the airline made AED1.3 billion ($353 million USD) with profits at its parent company, Emirates Group, dropping 70% from last 2015’s record breaking year.

Sheikh Ahmed bin Saeed Al Maktoum, the CEO of Emirates described the last year as “one of our most challenging years to date.”  The Sheikh went on to say:

“Over the years, we have invested to build our business capabilities and brand reputation. We now reap the benefits as these strong foundations have helped us to weather the destabilising events which have impacted travel demand during the year – from the Brexit vote to Europe’s immigration challenges and terror attacks, from the new policies impacting air travel into the US, to currency devaluation and funds repatriation issues in parts of Africa, and the continued knock-on effect of a sluggish oil and gas industry on business confidence and travel demand.”

The airline has been hit by a number of events that have shaken the global aviation market.  Emirates has listed problems that include the so called Muslim Ban, the U.S. Electronics Ban and international terrorism as all having an effect on the business.

Passenger Demand Has “Dried Up”

In an internal memo, the carrier claimed that demand on once previous routes had “dried up” – even during what should of been busy periods.  If that wasn’t enough, Emirates has seen revenue in Africa dry up and demand for it’s regional services in the Gulf region disappear.  On top of that, the continuing strength of the U.S. dollar wiped AED 2.1 billion ($572 million USD) from the airline’s revenue.

Unsurprisingly, Emirates has seen it’s load factor drop to an average of just 75%.  A weak profit margin of 1.5% hasn’t helped matters as the carrier cuts fares to entice passengers.  Sheikh Al Maktoum has said the business is actively responding to events:

“We are redesigning every aspect of how we do business, powered by an entirely new suite of technologies. Our aim is to deliver more personalised customer experiences, and seamless customer journeys, and make our operations and back-office functions even more efficient.”

It Wasn’t All Bad

Yet, 2016 wasn’t an entirely bad year for Emirates.  The airline increased it’s ‘Available Tonne Kilometres’ (ATKMs) by 7% in the past year to 60.5 billion ATKMs.  Emirates claims the increase is “cementing its position as the world’s largest international carrier.”  A record 56 million passengers flew with Emirates in 2016 – an increase of 8%.

Emirates also took delivery of 35 new aircraft in the last financial year and continues to be the world’s largest operator of the Airbus A380 and Boeing 777 aircraft.  The total fleet size now stands at 259 aircraft.  By retiring 27 older aircraft, Emirates also managed to reduce the average age of aircraft to 63 months – one of the youngest fleets in the world.

In the past year, the airline has aggressively expanded with new routes opening to Fort Lauderdale, Hanoi, Newark, Yangon, Yinchuan and Zhengzhou.

Do the American Carriers Get it Now

The news couldn’t sound much worse but Emirates is hoping the results will silence its strongest critics.  The Big Three U.S. airlines – American, Delta and United have been gunning for Gulf-based carriers, claiming they receive unfair state hand-outs.

Emirates has always rebutted these allegations and now claims it is holding is own, even in the most testing of times.

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