There are contrasting financial results from the Gulf's largest carriers, as Emirates recorded record profits while Gulf Air remained in the red but kept to a recovery plan as its losses fell.
Emirates defied gravity with another increase in yields, which the airline's president Tim Clark says was achieved by focusing sales on hard-currency markets. "We manipulate currency movements to our advantage," he says.
For the 12 months to March, the Dubai-based airline reported a 73.5% increase in net profit to a record $429 million, and its "best-ever" revenue result, a 37% increase to $3.6 billion. Passenger numbers broke the 10 million mark for the first time, increasing 23% to 10.4 million.
Yields grew by around 5-7% while unit costs fell by 4%. "It's all to do with segmenting the way we sell the seats," says Clark.
"As exchange rates fluctuate, we turned on our selling in the harder currency markets, and downgraded sales in the softer currencies."
Although the airline's load factor was down around five points from 70% to just under 65%, the margin to a break-even load factor was maintained, as this fell by a similar amount from 64.5% last year to 59% in 2003-4. Clark says that this fall is partly driven by cost reductions: "Since 1999-2000, our cost per available tonne kilometre has fallen 10%."
The Emirates SkyCargo freight business also had a good year, recording a 25.6% increase in volume to 660,000t. This increased the division's revenue by 42% to $659 million and contributed a record 20% to the airline's transport turnover.
Meanwhile, in Bahrain, Gulf Air has achieved the goal set by 2002's three-year "Project Falcon" recovery plan, with losses reduced by over 50% from 40.7 million Bahraini dinar ($108 million) in 2002 to 19.9 million dinar last year. This was its best result for four years, despite enduring what Gulf Air chief executive James Hogan describes as the "toughest aviation year ever".
Project Falcon, which calls for a break-even this year and profitability in 2005, remains on track, says Hogan, but he warns that "increasing competition and the significant increase in jet fuel prices will place additional pressure on the airline's performance". The airline has enjoyed a strong start to 2004, with annual passenger traffic growth running at 32%. Its 2003 revenues were up by 12.1% to 384.6 million dinar.
MAX KINGSLEY-JONES DUBAI
Source: Airline Business
