Emirates released its half-year results late on Thursday afternoon, revealing that profits had plunged 86% on the same period the year before to $62 million USD. The airline blamed rising fuel prices (up 42%) as well as continuing pressure on yields (a measure of the amount of profit made per passenger) and a strong U.S. dollar which have negatively affected costs at the Dubai-based carrier.
The airline’s chief commercial officer, Thierry Antinori warned on Tuesday that profits would be “badly hit” by rising oil prices. Speaking at an industry conference in Dubai, Antinori told the audience “it’s difficult to manage,” and that managing the situation had “not been a walk in the park,” according to a Reuters report.
Despite a 10% rise in revenues and improved seat load factors (the number of occupied seats on any given flight), Emirates saw its profits eroded by rising costs and competition from intense competition in some of the airline’s key markets.
Profits at the wider Emirates Group – which includes its Dnata ground operations division and in-flight catering company – were down 53%.
“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,” explained the airline’s chairman, Sheikh Ahmed bin Saeed Al Maktoum.
“The next six months will be tough,” he cautioned, but reaffirmed the airline’s commitment to providing “high-quality products that our customers value”.
The number of employees at Emirates has fallen by around 1% in the last year – The airline says this is “largely” down to natural attrition although it’s understood that there have been some redundancies as well. Despite a massive cabin crew recruitment drive, Emirates says it has otherwise slowed down its recruitment programme.
Like other airlines, Emirates has been negatively impacted by rising oil prices over the last 12 months. The carrier does not fuel hedge, which can be a great advantage when fuel prices are low or falling but can greatly increase costs when the price of oil quickly increases.