The Emirates Group has marked its 23rd consecutive year of profit with a record performance of AED 5.9 billion (US$ 1.6 billion) net profit, despite a challenging business climate.
The 2010-11 Annual Report of the Emirates Group – comprising Emirates Airline, dnata and their subsidiary companies – was released in Dubai today at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.
“This year’s record results represent our drive to push the boundaries of aviation, questioning the norms and advocating for open and fair competition. Despite unforeseen challenges in the form of political instability and shocking natural disasters we have managed, through sheer determination, nimbleness and quick thinking, to produce our best ever result,” said Sheikh Ahmed.
In the face of many challenges, both political and environmental, the Group’s revenue increased by 26.4 percent reaching a remarkable new level at AED 57.4 billion (US$ 15.6 billion). Strong revenue has been the main driver for the Group’s record financial performance. The Group’s cash balance rose substantially to hit a record high at AED 16 billion (US$ 4.4 billion).
The Group’s exceptional performance this year owes much to its dexterity and ability to adapt to changing market conditions quickly. In the first six months Emirates was able to capitalise on strong market demand thanks to its superior network and world-class product.
With political instability across parts of the world coming to the fore in the second half of the year, Emirates was able to swiftly adjust flight schedules, redeploying aircraft to balance the network and optimise revenue. The airline’s notable ability to drive revenue, in the midst of an unstable business environment enabled it to partially shield itself against a dramatic increase in fuel prices in the second half of the year.
During the year dnata forged forward with its international expansion through its proven strategy of acquisition, taking ownership of Alpha Flight Group Ltd, a leading caterer with operations in 61 airports globally. By being open to new business opportunities and continually seeking growth dnata has now become the world’s fourth largest air services provider.
“A clear indication of our strength, this year’s financial result represents the tireless work of our 57,000 strong workforce. Operating without subsidy and through a well thought out business model we have, as a team, been able to confront adversity on many levels,” added Sheikh Ahmed.
Customers’ continued preference for Emirates’ products has helped achieve sharp sales growth, record return for the financial year and the airline’s highest ever passenger numbers.
“Emirates continues to dismiss the perceived limitations of the aviation industry, advocating for an open skies environment that stimulates competition, an undeniable positive for the customer. The customer is at the heart of our operations, evident in the 31.4 million passengers that flew with us throughout the financial year, an increase of 14.5 percent or 4 million passengers on last year.”
On course with its financial commitments a net amount of AED 1.8 billion (US$ 500 million) was used to repay a bond that matured on 24th March 2011. The bond, listed on the Luxembourg Stock Exchange, was originally issued in 2004 with a seven year term.
Focusing on the theme of ‘open’ the 2010-11 Emirates Group Annual Report reflects on many of the Group’s successes that have ensured its continued profitability.
“Being open to competition, new ideas and most importantly the future, ensures that we stay ahead of the game. Knowing that we continue to delight our customers and motivate our employees is a true measure of our success,” continued Sheikh Ahmed.
“Looking ahead we have no plans to deviate from our proven strategy of investing in our business and focusing on core customer service. As we continue to grow, we are ambitious enough to believe that we can stimulate change in the aero political arena, for the benefit of the industry and the customers that it serves.”
Emirates Airline’s revenues grew by an outstanding 25 percent from last year to reach AED 54.4 billion (US$ 14.8 billion). Airline profits of AED 5.4 billion (US$ 1.5 billion) marked an increase of 51.9 percent over 2009-10’s profits of AED 3.5 billion (US$ 964 million).
Passenger Seat Factor, at 80.0 percent, indicates the airline’s highest ever, a remarkable achievement given a substantial increase in seat capacity (Available Seat Kilometres – ASKMs) of 13 percent. Overall capacity, measured in ATKM (Available Tonne Kilometres), rose 12.4 percent to 32,057 million tonne-kilometres.
Operating costs, at AED 48.9 billion (US$ 13.3 billion), were 22.7 percent higher than the 2009-10 financial year. This increase correlates with the rise in fuel prices and increased activity levels in addition to an overall growth in staff numbers and a rise in direct operating costs such as handling, in-flight costs and aircraft maintenance.
A sharp increase of 41.2 percent in the cost of fuel during 2010-11 at AED 16.8 billion (US$ 4.6 billion), accounted for a sizeable 34.4 percent of the airline’s total operating costs, close to the record highs witnessed in 2008-09. This increase is a direct result of the 26.5 percent hike in average fuel costs per US gallon, as well as higher overall consumption due to increased capacity.
Passenger yield increased by 8.5 percent to 28.3 fils per RPKM (Revenue Passenger Kilometre), up from 26.1 fils (7 US cents) in 2009-10.
During the year, in line with the airlines strategic growth plan, Emirates significantly increased its order for new aircraft, adding 32 additional Airbus A380s and 30 Boeing 777-300ERs. The combined value of these orders is US$ 13.4 billion and brings the airline’s total number of aircraft on order at the end of the financial year to 193, worth over US$ 66 billion.
Emirates took delivery of eight new aircraft during the year including one Boeing 777-300ER and seven of the airline’s flagship A380s expanding the airline’s fleet size to a robust 148 aircraft. Emirates remains the world’s largest A380 and Boeing 777 operator with 15 A380s and 86 Boeing 777s.
Expanding its global footprint the airline launched passenger services to six new destinations – Amsterdam, Prague, Al Medinah al Munawarah, Madrid, Dakar and Basra – as well as increasing frequency and capacity to a number of high-demand cities across multiple markets, most notably the US, Asia, Middle East and Africa.
Emirates continues to benefit from a diverse revenue base, with no single region contributing more than 30 percent of revenues. East Asia and Australasia led the way in 2010-11 with revenue growth of 30.9 percent at AED 3.7 billion (US$ 1.0 billion), Europe followed closely with an increase of 24.3 percent at AED 2.8 billion (US$ 769 million) due primarily to three new passengers destinations commencing in the region and increased capacity through larger aircraft.
The Emirates A380 network was further developed during the year with three new destinations; Beijing, Hong Kong and Manchester as well as the highly anticipated re-introduction of the A380 service to New York.
Emirates continued to invest in its product with two new airport lounges, Shanghai and New Delhi, taking the total number of Emirates dedicated lounges to 28. In total Emirates has invested AED 288 million (US$ 78 million) in its global lounge network.
Employees were also a focus of the 2010-11 financial year with Emirates Airline increasing employee numbers by 5.9 percent to reach nearly 39,000 employees, an incredible feat for an airline that only last year celebrated its silver jubilee. Many of these new employees fall within the Cabin Crew and Flight Deck departments on account of the eight new aircraft delivered throughout the year; as well as in preparation for continued aircraft deliveries in 2011-12.
Emirates SkyCargo saw a strong increase in revenue up 27.6 percent to a record AED 8.8 billion (US$ 2.4 billion) thanks to a worldwide rebound in cargo traffic. Cargo tonnage increased by 11.8 percent over the previous year to 1,767 thousand tonnes. Additionally freight yield per FTKM (Freight Tonne Kilometre) increased by 11.3 percent.
Cargo revenue contributed 17.4 percent to the airline’s total transport revenue, yet again one of the highest contributions of any airline in the world with a similar fleet. During the year, Emirates SkyCargo introduced four freighter-only destinations, Almaty, Bagram, Campinas and Erbil. At the end of the financial year, the freighter fleet was seven – three on wet lease and four on operating lease.
Emirates Airline’s Destination and Leisure Management (D&LM) division saw package sales of AED 1.1 billion (US$ 299.7 million) throughout the financial year, an increase of 10 percent on last year’s figures.
Marking another milestone, the Group’s Wolgan Valley Resort and Spa, Australia’s first conservation-based luxury resort, received an Overall Commitment to Excellence Award at the Leading Hotels of the World Awards, in addition to winning the Environment category.
For dnata the 2010-11 financial year has seen major international expansion to become the world’s fourth largest air services provider.
dnata’s revenue, driven by international expansion, crossed the AED 4 billion mark for the first time in its operating history reaching AED 4.4 billion (US$ 1.2 billion) up 39.4 percent from last year. The substantial increase in revenue is primarily a result of increased revenues from airport operations and cargo handling business lines in addition to the acquisition of Alpha Flight Group Ltd in December 2010.
During 2010-11 the third largest revenue stream for dnata was catering, jumping 438.3 percent to AED 576 million (US$ 156.9 million) thanks to the acquisition of Alpha. Although only accounted for since 31st December 2010, Alpha has sent 8.4 million meals into the skies from 61 airports in 11 countries. When Alpha is reported in entirety for the 2011-12 financial year dnata’s revenues are set to double over 2009-10 levels to around AED 6 billion (US$ 1.6 billion).
Despite the full year impact of the acquisition of Plane Handling and Alpha, dnata made its second largest profit in its operating history of AED 560 million (US$ 152.6 million). dnata operating costs for the 2010-11 financial year were AED 3.9 billion (US$ 1.1 billion).
The number of aircraft handled by dnata during the year increased by 21.1 percent to 232,585, with the majority of this growth stemming from international business. Total cargo handled improved by 33.3 percent to 1,494 thousand tonnes.
For dnata, strategically expanding its global footprint and increasing brand awareness was a chief objective during the year. The acquisition of Alpha is the largest to date, expanding dnata’s current total footprint to 94 cities in 37 countries across five continents.
Leading the way in innovation and highlighting the brand’s commitment to customer satisfaction, dnata travel services introduced a new iPad application during the year. The new application, created specifically for dnata provides clients with a quick and convenient way to make travel arrangements no matter where they are in the world.
Increasing productivity and streamlining efficiency, dnata installed a new, advanced GPS equipment tracking and monitoring system to significantly improve equipment allocation time for its ground handling operations at Dubai International Airport.
Breaking new ground dnata became the first airport service provider in Switzerland to obtain IATA’s Safety Audit for Ground Operations (ISAGO) accreditation, designed to improve ground handling quality and safety. dnata’s operations in Pakistan also achieved the same certification during the year.
dnata’s average employee strength grew considerably by 35.1 percent to almost 18,000 staff on account of the newly acquired Alpha. In total 46.9 percent of dnata’s workforce is now based internationally, outside Dubai.
As of 31st March 2011, the Group and its subsidiaries employed 57,000 staff, representing 163 different nationalities. The full 2010-11 Annual Report of the Emirates Group – comprising Emirates Airline, dnata and their subsidiary companies – is available on: www.theemiratesgroup.com/annualresults
