Emirates airline profits plunge 82.5% in past year

Carrier posts first drop in annual profits for five years, hit by US dollar’s rise, competition and travel restrictions.

Emirates 2016-2017 results
Emirates airline's net profit dropped from $1.9bn to $340m in the past year [Barbara Walton/EPA]

Emirates airline has blamed fierce competition, currency devaluations and US travel restrictions as it reported an 82.5 percent plunge in annual profits for the last fiscal year.

The Dubai-based company said net profit at its airline business dropped to $340m in the year to March 31, down from $1.9bn in the previous 12 months – its first decline in annual profit for five years.

The fall was the result of the US dollar’s “relentless rise” against currencies in its key markets and pressure on ticket prices due to stiff competition, the airline said in a statement.

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Company chief Sheikh Ahmed bin Saeed al-Maktoum also pointed to “destabilising events which have impacted travel demand during the year”.

These included Britain’s vote to leave the European Union, several attacks in Europe and restrictions on travel to the United States from the Middle East.

In April, Emirates began slashing 20 percent of its 126 weekly flights to the US, one of the airline’s biggest growth potential markets, because of a drop in demand caused by tougher security measures and the Trump administration’s attempts to ban travellers from some Muslim-majority nations.

Dubai was one of 10 cities in Muslim-majority countries affected by a ban on laptops and other electronics in carry-on luggage aboard flights to the US.

Maktoum said the company expected “the year ahead to remain challenging”.

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John Strickland, a UK-based aviation consultant, told the Reuters news agency he expected Emirates “to keep a tighter rein on its capacity growth in the short to medium term”.

Despite the challenges, the airline carried a record 56.1 million passengers in 2016-17, up 8 percent from the previous year.

But the company added more seats than it could fill in 2016-17, leading to a drop in the average yield per passenger.

The higher passenger capacity pushed up the carrier’s fuel bill by 6 percent to $5.7bn, despite a softening in average fuel price, Emirates said.

“There’s been an overcapacity in the market – Emirates are getting 75 percent of their seats filled but they are putting more capacity in with more aircraft,” Alan Peaford, editor-in-chief of the Arabian Aerospace magazine, told Al Jazeera from Essex, UK.

Peaford said he expected Emirates to continue expanding despite a decision to “pull back the delivery” of some planes.

“They will need to continue to invest because always in the aviation industry we have peaks and troughs – and Emirates in the past have shown to be incredibly wily and buying airplanes in a trough,” he said.

Airlines around the world have reported pressure on fares over the past couple of years due to volatile demand and cut-throat competition, though Europe’s major carriers have recently noted signs of the pressure easing.

Source: Al Jazeera, News Agencies