Emirates Net Down 72 Pct As Demand Slumps
Dubai airline Emirates posted a 72 percent year-on-year fall in net profit on Thursday, hit by a slump in demand during the global downturn, which it said has yet to improve.
However, Emirates said it would continue with a planned expansion of its fleet, having secured funding commitments for over half the aircraft due to be delivered in 2009.
"No one could have predicted the scale of the worldwide recession which is now impacting every country on earth," said Chairman Sheikh Ahmed bin Saeed al-Maktoum in a statement.
"Emirates has worked hard to cope with this downturn by maintaining our agility and responsiveness in a volatile economic environment."
Net profit in the 2008/09 financial year declined to AED1.49 billion dirhams (USD$405.8 million) from AED5.3 billion in the previous year, the statement said. Group revenues grew 10.4 percent to AED46.3 billion.
Emirates, the largest customer for the Airbus A380, with 58 aircraft orders, expects to receive 18 planes from Boeing and Airbus in the coming year.
"With our strong business fundamentals and track record, we have had no problems securing financing for our growth," Sheikh Ahmed said.
"In fact, to date we have already secured financial commitments for [the funding for] over half of our aircraft deliveries for the coming year."
The carrier, which started in 1985 with two planes, has grown to rival carriers such as Qantas Airways and Singapore Airlines for passenger traffic between Europe and East Asia.
It has USD$52 billion-worth of planes on order, excluding options, it said in the statement.
OUTLOOK
The prospects for the new financial year were not getting any better although he expected "satisfactory growth" for the group, Sheikh Ahmed said.
"Although fuel prices are dropping, demand for business and first class traffic is still weak in many markets," he said.
Earlier this year, IATA said that, after years of rapid growth, Middle Eastern airlines could double their losses to USD$200 million in 2009 as they felt the global financial crisis.
Some of the region's carriers, however, have been reporting steady growth. Abu Dhabi-based Etihad Airways has said it expects revenue to grow 24 percent to USD$3.1 billion this year.
The Middle East was the only region where airlines saw any growth in passenger demand in March. Emirates' passenger load factor during the month stood at 75.7 percent, the statement said.
Fuel costs in the year accounted for 36.2 percent of the airline's operating costs, the biggest portion ever, the statement said.
The group, which employs about 45,000 people, earlier this year offered cabin crew the option to take unpaid leave to help cut costs.
Dubai, the former Gulf Arab boom town, is part of the seven-member United Arab Emirates federation that also includes the capital Abu Dhabi, home to most of the country's oil.
As the financial downturn hit Dubai, speculation mounted that Emirates could either be merged with Etihad or bought by Abu Dhabi. Emirates has repeatedly denied such speculation.
The group estimates its total contribution to the UAE economy in 2008/2009 to have been around AED58.8 billion, it said in the statement.
