Emirates posts Dh284m profit in H1

High fuel costs sent Emirates’ net profits for the first six months ending September 30, 2008, down 88 per cent to Dh284 million ($77.3 million) from Dh2.36 billion for the same period in 2007. The airline said its fuel spending in the first half of this year more than doubled to Dh9.2bn from last year’s Dh4.1bn. Emirates’ operating revenues, meanwhile, increased by 31 per cent to Dh22.1bn, while the passenger traffic was up 11 per cent; passenger yield increased by 20 per cent and cargo tonnes went up 13 per cent. The seat factor averaged 78.3 per cent, down slightly on 79.7 per cent for last year, against a 13 per cent increase in capacity. With regards to projections for the next six months, Emirates’ President Tim Clark told Emirates Business: “I am not sure we would be able to recover the first half losses six months prior to that, but we would be able to recapture our profit targets faster with fuel prices coming down. After all, fuel costs took a straight hit to our bottom line.” Crude oil prices averaged $122 per barrel for the first six months of the financial year, up from an average of $67 for the same period last year. Clark said he expects fuel price to stay between $65 and $85 a barrel in the second half of the airline’s financial year and “hopefully even lower”. “If that happens and things go as they are going right now with our forward bookings looking good, I remain cautiously optimistic that we would be ahead of the game for our financial year 2008-2009,” he said, adding that the airline’s bookings looked up in January and February next year. Shuaa Capital’s Vice-President for Research, Kareem Murad, on the other hand, says that the airlines across the world, including Emirates, would experience lower load factors. “Emirates would be able to recover some of the losses it incurred in the first half of its financial year but I do not know to what extent. This is because a drop in load factors is going to kick in resulting in lesser revenues, besides the ongoing global financial crisis,” Murad told Emirates Business. Clark, meanwhile, said that the airline is going full steam with its fleet expansion plans besides adding new routes to its network. “Even though there is high volatility in the market right now, we are managing the business fine. And don’t forget that we are equally exposed to the fuel side of things just like other airlines in the world,” he said. He further said that the airline is also looking to cut costs further in order to restore its profit growth. Shweta Jain business24-7.ae