Emirates Profit Jumps 77% Amid Job Cuts, Reduced Dollar Impact
Emirates Group boosted first-half profit 77% as the biggest long-haul airline cut jobs and benefited from a more stable dollar as it seeks to recover from its first annual earnings decline for five years.
Net income increased to 2.3 billion dirhams ($630 million) in the six months that ended on September 30, with sales advancing 6% to 49.4 billion dirhams, the Dubai-based company said in a statement Thursday (November 9).
Emirates has been grappling with the toughest operating conditions in a three-decade history that’s seen it become an industry heavyweight by exploiting the position of the Gulf at a natural crossroads for inter-continental flights. The carrier has reduced the payroll by 3,000 people in six months, eliminating some senior cabin crew, support staff and IT workers, and has begun charging for perks such as advance seat selection in a bid to boost revenue.
Factors that weighed on earnings last fiscal year have also begun to subside, with the lifting of President Donald Trump’s laptops ban on U.S.-bound flights from Dubai, an easing of the Mediterranean immigration crisis and a rebound in European tourist visits that had dipped amid a spate of terrorist attacks. There’s also less pressure from a dollar which hurt earnings booked in a host of weaker currencies because of the dirham’s peg to the greenback.
“The easing of the strong dollar against other major currencies helped our profitability,” Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum said in a statement. “We are also seeing the benefit from various initiatives across the company to enhance our capability and efficiency with new technologies and new ways of working.”
Margins remain under pressure from increased competition, rising fuel costs and continued economic weakness and political uncertainty in some markets, he said.
Emirates posted a 70% drop in net income to 2.5 billion dirhams in the year through March as it grappled with the impact of terrorism on global traffic and the low price of crude weighed on the Mideast’s oil-based economies, crimping local travel.
Other Gulf operators have also suffered, with Etihad Aviation Group reporting a $1.87 billion loss in 2016 following failed investments in Air Berlin Plc, which folded last month, and Italy’s Alitalia SpA, which is seeking a rescue following a bankruptcy filing. Qatar Airways meanwhile said this week it’s headed for an annual loss after a Saudi-led blockade of its home nation forced the scrapping of some routes and the diversion of others.
News by Bloomberg, edited by Hospitality Ireland