A job well done

Emirates airline has once again emerged stronger despite the tough times for airlines across the globe. As the other leading international carriers either decelerated their growth plans or plunged into the red chiefly due to higher fuel prices, the world’s top airline managed to stay in positive columns. In view of the fact that the airline still managed to produce a profit figure of some $409 million on the back of a whopping 44 per cent rise in fuel costs, one has to say “it is a job well done” to Team Emirates. Just a day earlier, Cathay Pacific Airways announced to slow down its growth plans and predicted a ‘disappointing’ first half because of rising fuel prices and waning travel demand. The same day, Singapore Airlines also blamed the above factors for its S$38.2 million first-quarter loss and warned that passenger yields would remain weak. Contrary to this, the fact that Emirates has made profits continuously for 24 years shows just how astute it has been since its 1985 launch. The management has effectively expanded its business regardless of the prevailing environment, inducted a record number of airplanes in a year, improved its yields, seat load factor and passenger revenue all in one fell swoop. Not even low-cost airlines can manage to do all that, even with a lesser cost base. “Emirates’ performance is highly commendable and is living proof that despite economic challenges, money can be made. Weaker, less-efficient airlines need to sit up and take note — especially in Asia, Europe and the United States,” Saj Ahmad, chief analyst at London-based StrategicAero research, told Khaleej Times. According to aviation analysts, oil prices are seen destined to continue in an upward trajectory and by extension, airlines around the world will see profit margins erode. The level of erosion will depend on exposure, their hedging strategies and their operating costs. While the GCC has the world’s best airlines growing at a frenetic rate, other regions like the US, Europe and Asia are battling fuel-cost escalation. “The one key theme for 2012 is that oil prices will hurt airlines — the key is who manages that pain and who doesn’t. On Emirates’ current performance, the world’s airlines need to start watching what the Dubai-based leviathan does to improve their own health,” Ahmad said. The coming year will still be a huge challenge for Emirates, but it also represents a big opportunity for them. The airline’s continued expansion through more A380 and 777-300ER deliveries means that it would be chasing new business as well as pressuring the competitors not just in the Gulf, but overseas as well. The carrier sports one of the youngest, modern and most fuel-efficient airplane fleets in the world, dominated by the hot selling and most sought after Boeing 777-300ER, which is the backbone of its operations. “Emirates’ profits will still be under pressure, but the airline will still be profitable by a wide margin. It will really depend on how volatile and how high oil prices are as well as how far Emirates can go towards suppressing costs,” he added.