Emirates Group Reports Record Profit Increase for 2009/10

The Emirates Group has posted a record profit increase of 248%, an outstanding result in a year fraught with worldwide market instability and economic uncertainty.

His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group said, “It has been an exceptional year of continued profitability against a backdrop of the worst global recession in generations. The first half of the financial year however, was extremely challenging as the world continued to grapple with the economic crisis. Our pioneering spirit and ability to adapt in adverse conditions helped us to push through this harsh economic climate with an extremely strong performance in the latter part of the year.”

In a difficult year the group’s net profits increased 248% to AED 4.2 billion (US$ 1.1 billion) for the financial year ended 31st March 2010. Group revenue remained stable at AED 45.4 billion (US$ 12.4 billion) reflecting lower passenger and cargo yields offset by increased traffic. The Group profit margin improved to 9.1% from 2.6% a year earlier.

The group’s cash balance grew to AED 12.5 billion (US$ 3.4 billion) at the end of March, a remarkable improvement of 43.3% or AED 3.8 billion (US$ 1 billion) against the previous year. This result is also after AED 3.4 billion (US$ 931 million) of investments mainly in new aircraft, other aircraft related equipment and dedicated lounges.

The group’s performance this year, in some of the toughest operating conditions ever faced, reflects its success in maintaining its business as usual approach, remaining true to its strategy of product and service excellence. This is illustrated by the 27.5 million passengers who flew with Emirates in the latest financial year, 4.7 million more than in the previous year; as well as the expansion of Dnata’s international ground handling operations to 20 airports in nine countries.

Sheikh Ahmed said, “Time and time again Emirates has weathered adversity. We have operated through regional conflict, SARS, the Asian economic collapse and most recently the global recession. Our 21% increase in passenger numbers from last year is an incredible result and has helped to cushion us from the effects of lower yields. This increase in passenger numbers is attributable not only to our position at the centre of the new Silk Road between East and West, but also to our commitment in increasing our network and service standards, during a time where many competitors were doing the opposite.”

Emirates Airline’s revenues remained stable at AED 43.5 billion (US$ 11.8 billion), an increase of 0.4% from the previous year. Airline profits of AED 3.5 billion (US$ 964 million) marked an increase of 416% over 2008-09’s profits of AED 686 million (US$ 187 million).

Despite a 16.9% capacity increase during 2009-10 to 28,526 million ATKM (Available Tonne Kilometres), the Emirates’ operating costs in total decreased by 2.7% compared with the previous year. This results in a significant unit cost improvement of 16.6% and impressive productivity gain per employee, as the average airline employee strength has only increased by 2.3%.

Fuel costs in 2009-10 were significantly lower than the previous year by a notable AED 2.5 billion (US$ 691 million), accounting for 29.9% of total operating costs, down from 35.2% the previous year. The major reason for the reduction in overall fuel costs was the result of a 30.8% reduction in average fuel jet cost per US gallon.

In 2009-10, the airline’s passenger fleet expanded with the delivery of 15 new aircraft, four Airbus A380’s, 10 Boeing 777-300ERs and one Boeing 777 freighter. At the end of the financial year Emirates’ fleet reached 142 aircraft including four freighters. During the year Emirates became the largest Boeing 777 operator when it took delivery of its 78th B777 aircraft. The current fleet of all wide-bodied aircraft has an average age of 69 months.

At the end of the year, the total number of aircraft on Emirates’ order book, excluding options, was 146 aircraft, worth over US$ 48 billion.

Emirates recorded a Passenger Seat Factor of 78.1%, and a high seat capacity (Available Seat Kilometres - ASKMs) increase of 20.6%.

Yield declined by 16.9% to 211 fils (57.5 US cents) per RTKM (Revenue Tonne Kilometre), down from 254 fils (69.2 US cents) in 2008-09. This decline in yield was countered by the increase in passenger seat factor.

Emirates SkyCargo carried 1.6 million tonnes of cargo, an improvement of 12.2% over the year’s previous 1.4 million tonnes. Cargo revenue at AED 6.3 billion (US$ 1.7 billion) is 8.1% lower than last year as the result of declining yields. Cargo revenue, including mail and courier, contributed 17.2% of the airline’s total transport revenue.

Dnata managed to hold ground during an incredibly challenging year achieving its highest ever profit in its 50 year history. Profits increased by 20.9% to reach a record AED 613 million (US$ 167 million) despite an intensely tough business climate for airport and cargo operations. Revenue remained stable with a marginal drop of 0.7% to AED 3.2 billion (US$ 861 million).

Dnata’s operating costs were 4.2% or AED 113 million (US$ 31 million) lower compared with the previous year based on major cost saving initiatives across all business segments.

Dnata continues to play a major role in the group's growth by handling worldwide a record 192,120 aircraft (up 8.2% on last year) and 1,121 thousand tonnes of cargo, (up 11.8% over the previous year).

During 2009-10, Dnata International continued to expand its ground handling operations to bring its reach to 20 airports in nine countries. With the addition of London, Manchester and Erbil (Iraq) Dnata’s ground handling activities have increased by 45% with 26.9% of the company’s revenue from airport operations and cargo handling services coming from outside Dubai.

Dnata was the only company in the global ground handling sector to undertake a major acquisition in 2009 with the acquisition of two of the UK’s leading airport operations – Plane Handling which provides ramp and cargo handling services at Heathrow Airport as well as Cargo handling services at Manchester airport and Aviance which provides passenger and ramp handling operations at Heathrow’s Terminals 3 and 4. With these two new acquisitions Dnata’s international operations now handle as many aircraft turns and as much cargo volume as Dubai.

As of 31 March 2010, the group and its subsidiaries employed 50,000 staff, representing 150 different nationalities

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