Emirates, world’s largest long-haul international carrier, has become the latest airline to run into financial headwinds, posting a 75% drop in half-year profit.
The Dubai-based carrier blamed keen competition, currency fluctuations and less desire among the pubic to travel in the face of economic slowdown.
The result came as the International Air Transport Association (IATA) announced that global passenger traffic results for September showed that demand (measured in revenue passenger kilometres, or RPKs) had grown 7% compared to the same month in 2015 – the strongest year-over-year increase in seven months.
Emirates revenue, including other operating income fell slightly (by 1%) to USD 11.4 billion, compared with the USD 11.5 billion recorded last year.
The airline attributed that to “the unfavourable currency environment – where the US dollar continued to strengthen against most other major currencies; and increased competition resulting in lower average fares.
It continued: “The airline was also impacted by currency devaluation and hard currency shortage in some African countries, as well as dampened travel demand due to the ongoing economic malaise and looming security concerns across major markets in its network.”
Group revenue rose 1% to USD 12.7 billion, and profit of USD 364 million, down 64%, “reflects the double impact of a strong US dollar and challenging operating environment”, the airline said.
Emirates revenue declined 1% to USD 11.4 billion. The airline carried 28 million passengers, up 9%, on overall capacity expansion of 9%.
The results are measured against one of the airline’s best ever half-year profit performances last year.
“Our performance for the first half of the 2016-17 financial year continues to be impacted by the strong US dollar against other major currencies,” said His Highness (HH) Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group.
“Increased competition, as well as the sustained economic and political uncertainty in many parts of the world. has added downward pressure on prices as well as dampened travel demand.”
He added: “The bleak global economic outlook appears to be the new norm, with no immediate resolution in sight. Against this backdrop, the Group has remained profitable and our solid business foundations continue to stand us in good stead.”
Written by Peter Needham