Emirates Image Credit: File photo

Dubai: Emirates Group and Emirates Airline reported on Thursday a significant decline in profits on the back of high fuel costs and strong US dollar.

In its 2018-2019 annual report released on Thursday, the parent company of the Dubai-based carrier declared a profit of Dh2.3 billion for the financial year ended March 31, 2019, down 44 per cent from the previous results. The airline, at the same time, saw its net profits plunged 69 per cent.

“2018-19 has been tough, and our performance was not as strong as we would have liked,” said Shaikh Ahmad bin Saeed Al Maktoum, chairman and chief executive of Emirates Airline and Group.

“Higher oil prices and the strengthened US dollar eroded our earnings, even as competition intensified in our key markets.”

The group’s revenue reached Dh109.3 billion, up 7 per cent over last year’s results, while cash balance totaled Dh22.2 billion, down 13 per cent, mainly due to large investments into the business, including significant acquisitions and payment of last year’s Dh2 billion dividend.

Emirates Airline's financial performance

Profits for the airline reached Dh871 million, with the Dubai-based carrier saying “performance was not as strong as we would have liked.”

The airline said that the strength in the US dollar against currencies in many of its key markets had a Dh572 million negative impact to its bottom line – compared to a positive impact of Dh661 million in the previous year.

Emirates also saw its biggest-ever fuel bill, which jumped by 25 per cent year-on-year to Dh30.8 billion. Fuel, as a result, accounted for 32 per cent of operating costs, remaining the biggest cost component for the carrier.

The decline in profits came even as revenues for the airline inched higher by 6 per cent year-on-year to reach Dh97.9 billion.

Emirates Group

The company has recently invested billions of dirhams to upgrade its fleet and equipment, and despite the financial difficulties, it has managed to expand its workforce.

In 2018-19, the group collectively spent Dh14.6 billion (US$ 3.9 billion) for the acquisition of new aircraft and equipment, companies, modern facilities and latest technologies, as well as for staff initiatives. The spending had eclipsed the previous year's expenditure bill of Dh 9 billion (US$ 2.5 billion).

In February, Emirates announced a commitment for 40 A330-900s and 30 A350-900s worth US$ 21.4 billion at list prices in an agreement signed with Airbus. The planes are set to be delivered starting from 2021 until 2024.

Workers

As of the last count, the group’s total number of employees grew 2 per cent to 105,286.

“In 2018-19, we were steadfast with our cost discipline while expanding our business and growing revenues. By slowing the recruitment of non-operational roles, and implementing new technology systems and new work structures, we’ve improved productivity and retarded manpower cost increases,” Shaikh Ahmad said.

Shaikh Ahmad, however, assured that the company is well positioned to navigate speed bumps and face its competition.