Group records 30th consecutive year of profit of AED 4.1 billion (US$ 1.1 billion)
- Improved cash balance of AED 25.4 bn (US$ 6.9 bn)
- Declares a dividend of AED 2.0 bn (US$ 545 mn) to the Investment Corporation of Dubai
- Emirates reports a profit of AED 2.8 bn (US$ 762 mn), 124% better than the previous year
Airline capacity crosses 61 billion ATKM with a net addition of 9 new aircraft to the fleet
- Revenue rose by 9% to AED 92.3 bn (US$ 25.2 bn), supported by strong cargo performance
- dnata makes highest profit ever, at AED 1.3 bn (US$ 359 mn)
The Emirates Group today announced its 30th consecutive year of profit and steady business expansion.
Released today in its 2017-18 Annual Report, the Emirates Group posted a profit of AED 4.1 billion (US$ 1.1 billion) for the financial year ended 31 March 2018, up 67% from last year. The Group’s revenue reached AED 102.4 billion (US$ 27.9.billion), an increase of 8% over last year’s results, and the Group’s cash balance increased by 33% to AED 25.4 billion (US$ 6.9 billion) supported by the bond issued in March and strong sales due to the early Easter holidays at the end of March.
In line with the overall profit, the Group declared a dividend of AED 2.0 billion (US$ 545 million) to the Investment Corporation of Dubai.
His Highness (H.H.) Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group, said: “Business conditions in 2017-18, while improved, remained tough. We saw ongoing political instability, currency volatility and devaluations in Africa, rising oil prices which drove our costs up, and downward pressure on margins from relentless competition. On the positive side, we benefitted from a healthy recovery in the global air cargo industry, as well as the relative strengthening of key currencies against the US dollar.
“We’ve always responded to the challenges of each business cycle with agility, while never losing sight of the future, and this year was no exception. In 2017-18, Emirates and dnata delivered our 30th consecutive year of profit, recorded growth across the business, and continued to invest in initiatives and infrastructure that will secure our future success.”
In 2017-18, the Group collectively invested AED 9.0 billion (US$ 2.5 billion) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and staff initiatives.
Emirates announced two significant commitments for new aircraft during the year: a US$ 15.1 billion agreement for 40 Boeing 787-10 Dreamliners which will be delivered from 2022, and a US$ 16 billion agreement for 36 additional A380 aircraft, including 16 options.
dnata’s key investments during the year included: acquisition of AirLogistix USA, marking its entry in the US cargo market; expansion of cargo handling capabilities with new warehouses and equipment at London Gatwick, Amsterdam-Schiphol, and Adelaide; new catering facilities in Dublin and Melbourne; and new marhaba lounges in Karachi and Melbourne.
Sheikh Ahmed said: “While expanding our business and growing revenues, we also tightened our cost discipline. Across the Group, we progressed various initiatives to rebuild and streamline our back office operations with new technology, systems and processes. In 2017-18, our reduced recruitment activity, coupled with restructured ways of working gave us gains in productivity, and a slowdown in manpower cost increases.”
Across its more than 80 subsidiaries, the Group’s total workforce declined by 2% to 103,363, representing over 160 different nationalities, as part of the overall productivity improvement initiatives in Emirates and dnata.
Sheikh Ahmed concluded: “Looking ahead, Emirates and dnata remain focussed on delivering safe, efficient and high quality services consistently to our customers. Our ongoing investments in our people, technology, and infrastructure will help us maintain our competitive edge, and ensure that we are ready to meet the opportunities and stay on course for sustainable and profitable growth.”
Emirates’ total passenger and cargo capacity crossed the 61 billion mark, to 61.4 billion ATKMs at the end of 2017-18, cementing its position as the world’s largest international carrier. The airline moderately increased capacity during the year over 2016-17 by 2%, with a focus on yield improvement.
Emirates received 17 new aircraft, after last year’s record number during a financial year, comprising of eight A380s and nine Boeing 777-300ERs. At the same time, eight older aircraft were phased out, bringing its total fleet count to 268 at the end of March. This fleet roll-over involving 25 aircraft was again one of the largest managed in a year, keeping Emirates’ average fleet age at a youthful 5.7 years.
During the year, Emirates launched two new passenger destinations: Phnom Penh (Cambodia) and Zagreb (Croatia). Emirates also grew its global connectivity and customer proposition through strategic partnerships. During 2017-18, Emirates entered into significant partnerships with flydubai and Cargolux, expanding the choice of air services on offer to passenger and cargo customers respectively. Emirates also received authorisation to extend its partnership with Qantas until 2023.
In spite of political challenges impacting traveller demand and fare adjustments due to a highly competitive business environment, Emirates managed to increase its revenue to AED 92.3 billion (US$ 25.2 billion). The decline of the US dollar against currencies in most of Emirates’ key markets for the first time in a number of years had an AED 661 million (US$ 180 million) positive impact to the airline’s bottom line.
Total operating costs increased by 7% over the 2016-17 financial year. The average price of jet fuel increased sharply by 15% during the financial year. Including a 3% higher uplift in line with capacity increase, the airline’s fuel bill increased substantially by 18% over last year to AED 24.7 billion (US$ 6.7 billion). Fuel is now 28% of operating costs, compared to 25% in 2016-17, and it remained the biggest cost component for the airline.
The airline successfully managed strong competitive pressure across all markets and increased its profit to AED 2.8 billion (US$ 762 million), an increase of 124% over last year’s results, and a profit margin of 3.0%.
Emirates carried a record 58.5 million passengers (up 4%), and achieved a Passenger Seat Factor of 77.5%. The increase in passenger seat factor compared to last year’s 75.1%, is a result of successful capacity management in response to political uncertainty and strong competition in many markets despite a moderate 2% increase in seat capacity.
Supported by the weakening of the USD against most currencies, passenger yield increased to 25.3 fils (6.9 US cents) per Revenue Passenger Kilometre (RPKM).
To fund its fleet growth during the year with high ongoing new aircraft deliveries, Emirates raised AED 17.9 billion (US$ 4.9 billion), using a variety of financing structures, including the successful execution of a US$ 600 million sukuk in March to fund the acquisition of two A380 aircraft to be delivered in 2018.
Emirates closed the financial year with a healthy and increased level of AED 20.4 billion (US$ 5.6 billion) of cash assets.
Revenue generated from across Emirates’ six regions continues to be well balanced, with no region contributing more than 30% of overall revenues. Europe was the highest revenue contributing region with AED 26.7 billion (US$ 7.3 billion), up 12% from 2016-17. East Asia and Australasia follows closely with AED 25.4 billion (US$ 6.9 billion), up 12%. The Americas region recorded revenue growth at AED 13.4 billion (US$ 3.7 billion), up 7%. Gulf and Middle East revenue decreased by 2% to AED 8.5 billion (US$ 2.3 billion) whereas revenue for Africa increased by 8% to AED 9.4 billion (US$ 2.6 billion). West Asia and Indian Ocean revenue increased by 5% to AED 7.8 billion (US$ 2.1 billion).
For 2018-19, Emirates has announced new routes to London Stansted in the UK, Santiago in Chile, Edinburgh in Scotland, and an additional flight between Dubai and Auckland via Bali, aside from capacity upgrades to existing destinations.
Emirates SkyCargo recorded a strong performance in a resurgent market, and continues to play an integral role in the company’s expanding operations, contributing 14% of the airline’s total transport revenue. In an airfreight market with fast-changing demand patterns, Emirates’ cargo division reported a revenue of AED 12.4 billion (US$ 3.4 billion), an impressive increase of 17% over last year, while tonnage carried slightly increased by 2% to reach 2.6 million tonnes.
In its 59 years of operation, 2017-18 has been dnata’s most profitable year, crossing AED 1.3 billion (US$ 359 million) profit for the first time. Building on its strong results in the previous year, dnata’s revenue grew to AED 13.1 billion (US$ 3.6 billion), up 7%. dnata’s international business now accounts for 68% of its revenue.