Lower fuel costs and higher passenger loads helped profits at Emirates' airline operation jump back for the six months to 30 September 2019, though one-off items hitting Dnata's performance resulted in only relatively small gains in group profits over the comparable period.
Emirates' first-half net profit of Dhs862 million ($235 million) compares with Dhs226 million at the same stage last year. While a sharp improvement, it remains at about half the level of the airline's profits at the same stage two years ago, as difficult market conditions persist.
The improved performance at an airline level came despite capacity reductions that resulted from the planned 45-day closure of the southern runway at Dubai International airport.
Emirates
Emirates cut ASK capacity 5% in the six months to 31 September 2019, while traffic in RPKs was 2% down over the period. This helped lift Emirates' passenger load factor for the period by more than two points to 81.1%, while passenger yields climbed 1%.
Cargo volumes at the carrier, however, were down 8% in the first half – and yields 3% – reflecting the tougher air freight market during the year.
This contributed to a 3% fall in Emirates' revenues to Dhs47.3 billion during the first half.
Reduced capacity though also helped Emirates cut its operating costs by around 8% in the first half. It also benefited from lower oil prices – around 9% down on the same period last year – which contributed to a 13% reduction in its fuel costs for the six months.
While fortunes improved at the airline, profits fell 64% to Dhs311 million at ground services division Dnata. That largely reflects the inclusion of a Dhs321 million one-off gain in the previous period from the divestment of a 22% stake in travel management company Hogg Robinson Group.
But profits were also hit by the bankruptcy of Thomas Cook, one of the major customers for Dnata’s travel and catering businesses in the UK. This resulted in an impairment loss on trade receivables and intangible assets of Dhs84 million during the first half.
It means that overall, Emirates Group increased its net profit 8% for the six months ending 30 September 2019 to Dhs1.2 billion ($320 million). Group revenue was down 2% at Dhs53.3 billion.
Emirates group chairman Sheikh Ahmed bin Saeed Al Maktoum says: "The Emirates Group delivered a steady and positive performance in the first half of 2019-20, by adapting our strategies to navigate the tough trading conditions and social-political uncertainty in many markets around the world.
"Both Emirates and Dnata worked hard to minimise the impact of the planned runway renovations at DXB on our business and on our customers. We also kept a tight rein on controllable costs and continued to drive efficiency improvement."
He adds: "The global outlook is difficult to predict, but we expect the airline and travel industry to continue facing headwinds over the next six months with stiff competition adding downward pressure on margins."
