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Emirates yearly earnings drop 72 percent amid downturn, but airline maintains profit streak

May 21, 2009

DUBAI, United Arab Emirates — Emirates, the Middle East's biggest airline, said Thursday its profit tumbled 72 percent last fiscal year as it struggled with soaring fuel prices and a drop in demand caused by the economic slump.

The rapidly expanding Dubai-based carrier nonetheless was able to remain in the black for what it said was the 21st straight year thanks largely to increased sales driven by higher capacity.

"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," Sheik Ahmed bin Saeed Al Maktoum, the company's chairman and chief executive, said in a statement.

The state-owned carrier and its affiliated businesses posted a profit of 1.49 billion dirhams ($406 million) for the year ended March 31, down from a record profit of 5.3 billion dirhams in the previous fiscal year.

The Emirates Group figures include profit for the passenger airline as well as cargo services, tour operations and other related travel businesses.

Emirates airline itself saw earnings drop 80 percent to 982 million dirhams, from 5 billion dirhams a year earlier. The company attributed the decline to record fuel prices in the first part of the fiscal year and the effects of the global downturn.

The company was able to achieve what its head said was "under the circumstances ... a satisfactory result" by increasing sales and trimming per-passenger costs. Emirates said revenue over the fiscal year rose to 46.3 billion dirhams, from 41.9 billion dirhams a year earlier.

The sales gains largely reflected the company's turbocharged growth.

Over the course of the fiscal year, It added four new routes, including direct flights to Los Angeles and San Francisco, and beefed up frequency on others. The carrier took delivery of four Airbus A380s, ten Boeing 777 300ERs, and six Boeing 777 200LRs — boosting its fleet size by more than a sixth.

The company is Airbus' biggest customer for the A380 "superjumbo," with a total of 58 on order. It is due to receive a total of 18 new Boeing and Airbus aircraft this fiscal year.

The expansion has not come without bumps.

In March, Emirates said it was pulling two of its double-decker Airbus A380s off the high-profile New York route because of weak demand — less than eight months after the launching the service. It has also begun offering unpaid leave to thousands of crew members in an effort to cut costs.

Emirates said the forecast for the coming year looks challenging.

"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," Sheik Ahmed said.

He predicted, however, that the coming year would still be "one of satisfactory growth for the Emirates Group."

Emirates yearly earnings drop 72 percent amid downturn, but airline maintains profit streak
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Source: AP

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