Emirates Reports $288 Million Profit (Up 21%)

Filed Under: Emirates

In March Etihad reported their awful financial results from last year, as the airline lost $870 million, bringing their losses over the past four years to nearly $5.6 billion.

Now Emirates has reported financial results for the past financial year (April 1, 2019, through March 31, 2020), and they’re pretty good, as the airline has reported 32 straight years of profits.

Emirates reports $288 million profit

I’m going to be sticking solely to Emirates results here, rather than results from Emirates Group, which includes dnata (their airport services provider). Emirates reported a $288 million profit this past year:

  • Emirates profits are up 21% compared to the previous year (though down compared to two years ago)
  • The $288 million profit represents a 1.1% profit margin (the airline industry sure is low margin)

Emirates A380

Key figures of Emirates’ performance

Let’s look at a few key figures for Emirates for this past year:

  • Revenue declined by 6%, to $25.1 billion
  • Seat capacity decreased by 6%
  • Emirates’ fleet stayed consistent at 270 aircraft; the airline took delivery of six A380s, but retired six 777s
  • The average fleet age of Emirates’ 270 planes is 6.8 years
  • Emirates carried 56.2 million passengers (down 4%)
  • The average load factor was 78.5%, up by 1.7% from the previous year
  • The average passenger yield remained the same, at 7.1 US cents per revenue passenger kilometer
  • Operating costs decreased by 10%, with the price of jet fuel decreasing by 9%

It’s also interesting to note how different regions contributed towards Emirates’ revenue, with no region contributing more than 30%:

  • Europe generated $7.1 billion in revenue (down 8%)
  • East Asia and Australasia generated $6.6 billion in revenue (down 9%)
  • The Americas generated $4 billon (up 1%)
  • Africa generated $2.4 billion (down 8%)
  • Gulf and Middle East revenue generated $2.1 billion (down 3%)
  • West Asia and Indian Ocean revenue generated $2.7 billion (up 4%)

Emirates took delivery of their last 777-300ER this past year

Challenges that Emirates faced

While Emirates’ financial performance is better than the previous year, the airline faced some challenges over the course of the financial year:

  • Starting in mid-February Emirates was hit hard by the current pandemic
  • Dubai International Airport had a 45 day runway closure in the second and third quarter of 2019, limiting Emirates’ operations
  • The strengthening of the USD compared to currencies in other key Emirates markets is estimated to have cost the airline $262 million
  • Bad fuel hedging cost the airline $299 million as well

Emirates’ new 777-300ER first class

Is this all just fake math?

When I write about the financial performance of the Gulf carriers, there are always questions about whether this is all just imaginary math, given that the Gulf carriers are state owned.

After all, US airlines spent millions of dollars over many years trying to convince us that these are heavily subsidized airlines that are losing billions of dollars (though they’re changing their tune on this, and American and Qatar have even announced an expanded partnership).

My personal take is that these results are mostly accurate. After all, Emirates results are independently audited per international financial reporting standards.

However, there’s no denying that airlines like Emirates have benefited from some things over the years:

  • They’ve had easier access to financing on account of being government owned, which has allowed them to grow as much and as quickly as they have
  • They largely have lower operating costs than other airlines, given that they essentially have the same owner as the airport, ground handlers, catering company, etc.

I do think Emirates is “legitimately” profitable. The problem with the A380 for most airlines is that they haven’t been able to scale their operations in a way that works. Emirates has been able to scale their route network unlike any other airline. Of course COVID-19 might change that, but that was at least the case until a few months ago.

Obviously Etihad and Qatar don’t have similar success, as both airlines were losing a lot of money even before the current pandemic.

Bottom line

All things considered, Emirates’ performance for the past year is pretty impressive, especially in contrast to the results of Etihad and Qatar (Etihad is a basket case, while Qatar is dealing with the Gulf blockade).

Emirates’ profits would have been bigger if it weren’t for bad fuel hedging and currency fluctuation, not to mention the current pandemic that impacted the last several weeks of the financial year, but that’s a cost of doing business as a global airline.

Suffice to say that the next financial year is unlikely to be as good…

Comments
  1. I should also add Emirates does not make the same mistakes that Etihad, Qatar and Delta do which is investing in loss making carriers and throwing bucket loads of cash at them with no return.

  2. The ME airlines are going to have to face a West where regulatory thought is shifting from a primary focus on cost containment to one that takes into account the interests of all stakeholders.

    That combined with an increasing nationalism/regionalism combined with increasing viability of point-to-point flying doesn’t bode well for them.

    What they really need is a reason for people to fly to their domiciles, not just through them.

  3. LMAO @Jonn, the UAE doesn’t support terrorism? What exactly is the alliance with al-Qaeda in Yemen then? The support for the STC? The support for the warlord Khalifa Haftar? You know, the UN wrote a letter to the UAE about being al-Shabaab’s economic lifeline?

  4. A profit of $288 million is impressive, yet Emirates is still not refunding fares paid for flights Emirates themselves cancelled. Not impressive. But a clever way to make a profit!

  5. To suggest that airlines such as Emirates and Qatar somehow support terrorism is stupid. Yes, they are government owned. But that doesn’t amount to these planes, pilots, flights attendants (all foreign) dancing to the tune of the host country’s foreign policies (except for the desire to connect the world through their respective hubs, and providing superior customer service along the way).

  6. Jonn says:
    May 10, 2020 at 12:50 pm
    Wow! so casually spoken on terrorism and even made decisions. Seems you got a specialist degree on the subject, maybe a crystal ball?? Perhaps you could answer, what happened to all the ‘terrorism’ in the world with COVID19? Perhaps the virus killed it too!

  7. Those on QR investing in loss making airlines are pure rubbish. Air Italy aside, which they pulled out fast enough unlike Etihad, they were investing in immensely profitable airline companies like IAG, Cathay Pacific, and so on. Terrorism funding is just smokescreen used, don’t forget who funded Saudis was on Afghanistan that ultimately created bin Laden, or where did the Iranians F14s come from. Republicans are doing it again by funding the Russians to rig votes.

  8. US Airlines are state financed but privately owned. We carelessly fund lavish stock buybacks and then repeatedly bail them out as needed. The American people are like a rich aunt to a druggy teenager. The Gulf airlines are just living with their parents.

  9. I have read that Dubai except Emirates from all airport handling fees while foreign carriers have to pay. If thats accurate, it could be a major contributor to their economy…

  10. Quite shameful to even care Emirates makes profits. It is a sham. Getting “independent auditors” – you do know how EY got blasted when a whistleblower came about on the going ins in Dubai. And Ben you once wrote an article about the labourers in Dubai. That’s exactly what Emirates runs. If I OWN THE AIRPORT, THE REGULATORY AUTHORITY, GROUND HANDLER AIRPLANES AND DICTATE WHO PAYS THE FEES THEN I AM THE ONLY ONE MAKING PROFITS. Emirates lives off cheap cheap labour – imagine hiring a ground agent for barely $1000 a month from South Asia. Cleaners for $250 a month. Do the math. In fact everyone should be ashamed for supporting these horrible crooked airlines and now the truth is being shown with covid. I’m going to openly bash them because you need to look beyond your credit card miles and open your eyes. Things are not right there at all

  11. @Jacob, I beg to differ and side with Lucky on this one. Emirates has some great cabin crew men in Business and First class that have always given this spicy latino an AMAZING taste and tour of Dubai, if you know what I mean. I’m sure Lucky had a few “friendly” encounters back in the days before Ford. For that, I commend Emirates for find the right men to serve me and how they handle their business!

  12. I mean I would post a profit too if I told people they wouldn’t get flight refunds for at least 90 days…. pathetic.

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