Emirates 2016/2017 annual results – as bad as expected

Emirates Results excluding DNATA in AED billions y/e 31
March
2017
half
year
to 31 March 2017
half year to 30 Sept 2016 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
y/e
31
March
2011
Airline Revenue including other operating income  85.1 43.2 41.9 85.0 88.8 82.6 73.1 62.3 54.2
Airline Profit Attributable to Owner 1.3 0.5  0.8  7.1 4.6 3.3 2.3 1.5 5.4
Costs:
Fuel Costs  20.9  19.7 28.7  30.7  27.9 24.3 16.8
Staff Costs 12.8 12.4 11.9  10.2 9.0 7.9 7.6
Aircraft – Number:  259 251 231
Airline Profit attributable to shareholder as % of revenue 1.5%  8.4% 5.1% 4.0% 3.1% 2.4% 10.0%
Passengers flown 56.1  28.1  28.0 51.9 48.1 44.5 39.4 34.0 31.4
Load factor  75.1% not separately reported 75.3% 76.5% 79.6%  79.4% 79.7% 80% 80%
Total Group Revenue inc DNATA  94.7 48.2 46.5  92.9 96.5 87.8 77.5 67.4 57.4
Total Group profit inc DNATA attributable to owner 2.5  1.2 1.3 8.2 5.5 4.1 3.1 2.3 6.0
Group Profit Share Target 7.27 billion 3.7 billion 4.255 billion 3.5 billion 6.0 billion ? unknown
Profit Share Zero 3 weeks 9 weeks Profit share target not achieved but nominal bonus of 3 weeks  Zero  Zero 12 weeks

Looking for a silver lining the Emirates Group announced that it had recorded its 29th consecutive year of profit. In this case just AED 2.5 billion (US$ 670 million).

The airline itself, Emirates, reported a profit of AED 1.3 billion (US$ 340 million). The balance of the Group profit came from DNATA.

Yet despite significant capacity increases revenue was basically unchanged at AED 85.1 billion (US$ 23.2 billion).

So what were the underlying causes. Emirates blamed just about everything and everyone, other than its own leaders.

  • The “relentless rise” of the US dollar in most of its key markets.
  • The Brexit vote
  • Europe’s immigration challenges and terror attacks
  • New policies impacting air travel into the US.
  • Currency devaluation and funds repatriation issues in parts of Africa.
  • The continued knock-on effect of a sluggish oil and gas industry on business confidence and travel demand.
  • Competition squeezing airline yields.
  • Volatility in many markets impacting travel flows and demand.

Yes, it was the Groups 29th consecutive year of profits,  but the figure collapsed by 70% to Dhs2.5 billion.

The airline’s profit decreased by 82% to Dhs1.3 billion. The seat load factor declined to 75.1% from 76.5%. Seat capacity increased by 10%.

The airline has responded with a plan to cut total operating costs. But the sponsorship portfolio is unlikely to change; although the airline did sever its World Cup connections with FIFA.

Route cuts seem inevitable: the airline has reduced 25 weekly services to five destinations in the US and optimised frequencies to others including Athens, Birmingham and Rome. It stopped services to Sabiha Gokcen, Turkey and Abuja, Nigeria last year.

But that capacity has to be either re-deployed or airplanes put into storage.

Of course the airline fell far short (66%) of its profit share target of Dhs7.27 billion. There was no profit share for 2016/2017.

As I have said before there are changes coming at Emirates and for the structure of the UAE’s airlines.

 

 

 

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