Emirates 2017/2018 results – steadying the ship


Emirates today announced its full year results for the year to 31 March 2018.

The annual report is here:

2017/2018 Emirates Annual Report

2016/2017 was terrible. So an improvement was always likely. But it is solid rather than impressive.

My commentary on last years results is here:

Emirates 2016/2017 annual results – as bad as expected

What does strike me is how hard the airline has to work to make any money at all. A profit margin of just 3% on revenues of AED92.3 billion suggests a business that is little better than marginal when it comes to making money.

It is also worth noting that the margin dropped off significantly in the last six months of the year – from 3.8% to 2.3% despite a 7.4% increase in revenues in the second half of the year. This may in large part be due to increasing fuel prices. But in itself this must be an early concern for 2018/2019.

Here are the summarised results with previous years for comparison:

Emirates Results excluding DNATA in AED billions  y/e 31 March 2018 Half year to 31 March 2018 Half year to 30 Sept 2017 y/e 31 
March 
2017
y/e 31 
March 
2016
y/e 31 
March 
2015
y/e
31 

March 
2014
y/e
31 March
2013 
y/e
31 March
2012
Airline Revenue including other operating income 92.3 47.8  44.5 85.1 85.0 88.8 82.6 73.1 62.3
Airline Profit Attributable to Owner 2.8 1.1 1.7  1.3  7.1 4.6 3.3 2.3 1.5
Costs:
Fuel Costs  24.7  20.9  19.7 28.7  30.7  27.9 24.3
Staff Costs 13.1  12.8 12.4 11.9  10.2 9.0 7.9
Aircraft – Number:  268 259 251 231
Airline Profit attributable to shareholder as % of revenue 3.0% 2.3% 3.8% 1.5%  8.4% 5.1% 4.0% 3.1% 2.4%
Passengers flown 58.5 29.3 29.2  56.1 51.9 48.1 44.5 39.4 34.0
Load factor  77.5 n/a  77.2 75.1% 76.5% 79.6%  79.4% 79.7% 80%
Total Group Revenue inc DNATA 102.4 53.0  49.4 94.7  92.9 96.5 87.8 77.5 67.4
Total Group profit inc DNATA attributable to owner 4.1 1.8 2.3 2.5 8.2 5.5 4.1 3.1 2.3
Group Profit Share Target none 7.27 billion 3.7 billion 4.255 billion 3.5 billion 6.0 billion ?
Profit Share 5 weeks Zero 3 weeks 9 weeks Nominal bonus of 3 weeks  Zero  Zero

Staff costs are stable; cabin crew numbers actually declined by 1,305 staff (which explains some of the current staffing issues); fuel costs remain the most expensive element of the airline’s costs and a huge variable representing 28% of operating costs in the year.

Also buried in the 2018 profit is an aed0.7b currency gain.

The year appears to be one of consolidation. While the airline received 17 new aircraft it also removed eight older aircraft.

There were just two new passenger destinations, Phnom Penh (Cambodia) and Zagreb (Croatia), launched in the year.

Instead growth was sort through new partnerships with flydubai and Cargolux, expanding the choice of air services on offer to passenger and cargo customers respectively.

The results are solid. Fortunately they do not reflect the woes of the airline down the road whose strategy of investing in various loss making, cash-demanding, airlines was disastrous. The message is that it is hard enough to manage your own airline, let alone someone else’s.

 

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