Profitability was up 8 per cent compared to the same period last year.
The Emirates Group on Thursday announced its half-year results for its 2019-20 financial year.
Group revenue was Dh53.3 billion ($14.5 billion) for the first six months of 2019-20, down 2 per cent from Dh54.4 billion ($14.8 billion) during the same period last year.
This slight revenue decline was mainly due to planned capacity reductions during the 45-day Southern Runway closure at Dubai International airport (DXB), and unfavourable currency movements in Europe, Australia, South Africa, India, and Pakistan.
Profitability was up 8 per cent compared to the same period last year, with the Group reporting a 2019-20 half-year net profit of Dh1.2 billion ($320 million). The profit improvement was primarily due to the decline in fuel prices of 9 per cent compared to the same period last year, however the gain from lower fuel costs was partially offset by negative currency movements.
The Group’s cash position on September 30, 2019 stood at Dh23.0 billion ($6.3 billion), compared to Dh22.2 billion ($6.0 billion) as of March 31, 2019.
Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group said: “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, while ensuring that our resources were deployed nimbly to capitalise on areas of opportunity.
“The lower fuel cost was a welcome respite as we saw our fuel bill drop by Dh2 billion compared to the same period last year. However, unfavourable currency movements wiped off approximately Dh1.2 billion from our profits.
“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. As a Group, we remain focussed on developing our business, and we will continue to invest in new capabilities that empower our people, and enable us to offer even better products, services, and experiences for our customers.”
The Emirates Group’s employee base remained unchanged compared to March 31, 2019, at an overall average staff count of 105,315. This is in line with the company’s planned capacity and business activities, and also reflects the various internal programmes to improve efficiency through the implementation of new technology and workflows.
Emirates airline’s overall capacity during the first six months of the year declined by 7 per cent to 29.7 billion Available Tonne Kilometres (ATKM) mainly due to the DXB runway closure and reduction in fleet during this 45-day period.
Capacity measured in Available Seat Kilometres (ASKM), shrunk by 5 per cent, whilst passenger traffic carried measured in Revenue Passenger Kilometres (RPKM) was down by 2 per cent with average Passenger Seat Factor rising to 81.1per cent , compared with last year’s 78.8 per cent .
Emirates carried 29.6 million passengers between 1 April and 30 September 2019, down 2 per cent from the same period last year, however, passenger yield increased by 1per cent period-on-period. The volume of cargo uplifted at 1.2 million tonnes has decreased by 8 per cent while yield declined by 3 per cent. This reflects the tough business environment for air freight in the context of global trade tensions and unrest in some key cargo markets.
In the first half of the 2019-20 financial year, Emirates net profit was Dh862 million ($235 million), up 282 per cent , compared to last year. Emirates revenue, including other operating income, of Dh 47.3 billion ($12.9 billion) was down 3 per cent compared with the Dh48.9 billion ($ 13.3 billion) recorded during the same period last year.
This result was driven by increased agility in capacity deployment, with healthy customer demand for Emirates’ products driving improved seat load factors and better margins.
Emirates operating costs shrunk by 8 per cent against the overall capacity decrease of 7 per cent . On average, fuel costs were 13% lower compared to the same period last year, this was largely due to a decrease in oil prices (down 9 per cent compared to same period last year), as well as a lower fuel uplift due to reduced capacity during 45-day runway closure at DXB. Fuel remained the largest component of the airline’s cost, accounting for 32 per cent of operating costs compared with 33 per cent in the first six months of last year.
dnata continued to strengthen its global capabilities in ground handling, catering and travel services, with operations spanning over 35 countries. In the first half of 2019-20, dnata’s international operations accounted for over 72 per cent of its revenue, compared to 68 per cent during the same period last year.
dnata’s revenue, including other operating income, was Dh7.4 billion ($ 2.0 billion), a 5 per cent increase compared to Dh7.0 billion ($1.9 billion) last year. This performance was underpinned by robust business growth and further global expansion, particularly in its catering business.
Overall profit for dnata was down by 64 per cent to Dh311 million ($85 million), compared to last year’s result which included an Dh321 million one-off gain from the divestment of dnata’s 22 per cent stake in the travel management company Hogg Robinson Group (HRG).
dnata’s half year profit for 2019-20 was further impacted by the bankruptcy of Thomas Cook, one of its major customers for dnata’s travel and catering businesses in the UK, resulting in an impairment loss on trade receivables and intangible assets amounting to Dh84 million.
dnata’s airport operations remains the largest contributor to revenue with Dh3.6 billion ($983 million), a slight increase as compared to the same period last year. Across its operations, the number of aircraft handled by dnata remained steady with 351,194, and it handled 1.5 million tonnes of cargo, down 6 per cent.
Organic growth across dnata’s international ground handling business with key contract wins across US locations, and improved performance in markets such as Italy, Singapore, Switzerland and Iraq, helped drive dnata’s revenue and compensate for the negative currency impact of approximately Dh86 million. In the UAE, dnata acquired full ownership of freight forwarding company, Dubai Express, which bolstered its revenues in the first half year of 2019-20, and helped soften the impact of losses due to the 45-day runway closure at DXB.
dnata’s travel division contributed Dh1.8 billion ($488 million) to revenue, up 7 per cent from the same period last year. The division’s underlying total transactional value sales remained at Dh5.9 billion ($1.6 billion).
dnata’s flight catering operation, contributed Dh1.8 billion to its total revenue, up 54 per cent. The number of meals uplifted increased by 67% to 51.9 million meals for the first half of the financial year.
Click here to read more news from @khaleejtimes