Middle Eastern carrier Emirates is confident of a strong second-half financial performance as fuel prices relent and demand continues to hold.
Emirates has just disclosed a sharp drop in first half profits – net profits dropping 88% to Dhs284 million ($77 million) for the six months ending 30 September – as increased fuel costs took their tool.
The carrier posted a 31% rise in operating revenues to Dhs22.1 billion after passenger traffic increased 11%, while passenger yield was up a fifth.
But Emirates’ fuel costs for the six-month period were over budget by Dhs1.7 billion, reaching a total of Dhs9.2 billion - more than double the first-half total in 2007.
Speaking during the World Travel Market exhibition in London, Emirates Airlines president Tim Clark pointed to the strong fundamentals of the business.
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"Everything we have done in the first six months - yield, passengers, revenues - is up, but what is down is fuel."
While the first half saw record high fuel prices, peaking at nearly $150 per barrel, the carrier hopes to benefit from the sharp reduction in oil price seen over recent months. "Now that price is down at the mid-60s we are back in business big time," says Clark.
"Today the UK operation in December and January is full, Australasia is full, our African operations are always full. If there is any softness, it's in the premium segment. I had expected more, but it hasn't really happened.
"There is also some back-filling. As the business element softens, up pops the [visiting friends and relatives] traffic.
"There seems to be disposable income and a propensity to spend, which I thought would have gone by now. One wonders what will happen as we go through the medium term, but we can't take any knee-jerk reactions. We have to keep our powder dry."
Emirates posted net profits of Dhs5.3 billion ($1.4 billion) last year and, encouraged by second-half demand and lower fuel prices, Clark believes the carrier could reach about Dhs3 billion this year.
"Much will depend, but if things continue - if yield, demand and fuel prices hold - we have a fighting chance of getting out of this pretty strong," he says.
Source: Air Transport Intelligence news
