Emirates group reports AED 2.3 billion net profit

The Emirates Group has reported its 24th consecutive year of profit and companywide growth amidst unprecedented economic pressure and record high fuel prices. Released on Thursday in the group’s 2011-12 Annual Report the company posted a AED 2.3 billion (US$ 629 million) net profit, with dnata marking its highest ever profit in 52 years of operation. Despite fundamental challenges, the group’s revenue reached a record high, climbing to AED 67.4 billion (US$ 18.4 billion) an increase of 17.8% on last year’s results. The group’s cash balance grew by 9.5% reaching a strong AED 17.6 billion (US$ 4.8 billion). “Achieving our 24th consecutive year of profit and maintaining an upward growth trajectory is an achievement that belies the industry norm,” said His Highness (H.H) Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.  “Throughout the 2011-12 financial year the group has collectively invested close to AED 14 billion (US$ 3.8 billion) in new products. This investment has garnered new customers and increased our international presence. Successful business growth is not a matter of luck, it is the result of sustained and calculated investment. Every dirham that we earn is strategically ploughed back into our business and it is this foresight that has allowed the group to maintain such strong and consistent profitability.” Despite a difficult operating environment, the group continued to invest in and expand on its employee base, increasing its overall staff count by more than 10%. During the year Emirates received a staggering 22 new aircraft, its highest in any single year, funded by a wide variety of financing structures. With an increased fleet, Emirates further invested in its network by adding 11 new destinations and increasing capacity to 34 cities, a record for the airline. “Managing volatile exchange rates, coupled with our highest ever fuel bill has required immense tenacity. Retaining growth and remaining profitable in these challenging economic times shows our profound understanding of the markets that we do business in,” added Sheikh Ahmed. Reaching a record profit, dnata stayed true to its proven acquisition strategy, gaining a majority stake in online travel agency, Travel Republic Ltd and a 50% interest in Wings Inflight Services in South Africa. Importantly the results for 2011-12 highlight that 55% of dnata’s revenue is derived from its international operations, an increase of 17 percentage points over last year. In the 2011-12 financial year Emirates’ fuel bill increased by 44.4% over last year to reach AED 24.3 billion (US$ 6.6 billion). With operating costs increasing by 24% compared to a revenue increase of 16.2% over last year, Emirates bore the brunt of the crippling cost of fuel for nearly one year, before reluctantly introducing a fuel surcharge on all tickets. In addition to the cost of fuel Emirates had an operationally challenging year with the political unrest across the Middle East and North Africa affecting flight schedules. By keeping a tight focus on operations and modifying capacity and schedules Emirates was able to maintain profitability. “In the last five years, Emirates’ capacity measured in Available Seat Kilometres, has increased by almost 100% facilitating new trade links and creating a new flow of passenger traffic. Being the first to capitalise on these new opportunities has allowed us to gain a distinct competitive advantage, one that we intend to maintain,” said Sheikh Ahmed. Highlighting its sound financials, Emirates launched its highly successful US$ 1 billion bond in June last year and despite many traditional financing partners suffering from the Eurozone debt crisis, the bond was well received by global investors reflecting confidence in the Emirates business model. In addition to this, Emirates repaid a Sin$250 million bond in full that matured in June 2011. The bond, listed on the Singapore Stock Exchange, was originally issued in 2006 with a five year term. “We move into the new financial year with cautious optimism, navigating our way through the difficult economic climate with a clear vision for our continued success. We understand that succeeding in this industry requires determination and we are unapologetic about our drive to be the best,” added Sheikh Ahmed. “We are never complacent, always striving for perfection and always acutely aware that things can be done better. Customers’ expectations only get higher and it is up to us to ensure that we move upwards with them. With the help of our 63,000 strong multicultural workforce we have no doubt that the years ahead will again be more profitable than the last.” Emirates revenue reached a record high of AED 62.3 billion (US$ 17 billion) growing by 14.9% when compared to the 2010-11 financial year. Despite this strong revenue growth, the stifling cost of jet fuel impacted Emirates’ bottom line with the airline’s profit sitting significantly lower than the previous year at AED 1.5 billion (US$ 409 million) representing a decrease of 72.1% over last year’s record results. Carrying a record 34 million passengers, an increase of 8%, Emirates logged a robust Passenger Seat Factor, at 80.0%, remaining consistent with last year’s results. With an increase in seat capacity - Available Seat Kilometres (ASKMs) of 9.8% the result highlights a strong consumer desire to fly on Emirates’ state-of-the-art aircraft. Passenger yield increased by 7.8% to 30.5 fils (8.3 US cents) per Revenue Passenger Kilometre (RPKM), up from 28.3 fils (7.7 US cents) in 2010-11. Revenue generated from across Emirates’ six regions continues to be well balanced, with no region contributing more than 30% of overall revenues. East Asia and Australasia remained the highest revenue contributing region with AED 18.2 billion (US$ 5.0 billion) up 17.6% from 2010-11. Europe, up 18.2% to AED 17.1 billion (US$ 4.6 billion) and the Americas up 21.3% to AED 6.7 billion (US$ 1.8 billion) also saw significant growth, reflecting new destinations as well as increased frequency and capacity to these regions. Across the rest of the globe Emirates saw strong revenue increases from West Asia and the Indian Ocean up 10.6% to AED 7.1 billion (US$ 1.9 billion), Gulf, Middle East and Iran up 15.1% to AED 6.3 billion (US$ 1.7 billion) and Africa with AED 6.1 billion (US$ 1.7 billion) in revenue, up 9.5%. In contrast to the global economic environment Emirates witnessed an upward trend in its premium class seat factor for a second year, up 1.9%age points from 2010-11. Premium and overall seat factor for the airline’s flagship A380 aircraft sat even higher, highlighting a continued demand in the product from passengers.