Emirates Profits Slump 66% On War, Fuel Costs

Emirates Group, which operates the region’s biggest airline, announced a 66 percent plunge in first-half profits on Thursday, blaming “unprecedented” disruption and high fuel prices caused by the Middle East war.

Despite difficult months, net profits stood at $1 billion, said the Dubai-based, state-owned group, down from $2.9 billion last year.

Dubai airport was repeatedly targeted as the United Arab Emirates bore the brunt of Iranian drone and missile attacks in the early part of the war, causing havoc with flights and putting off visitors to Dubai.

“It has been a demanding six months,” Sheikh Ahmed bin Saeed Al Maktoum, Emirates chairman and chief executive, said in a statement, citing “unprecedented regional challenges and high fuel prices”.

“Customer demand held firm and our cargo operations made a strong contribution, keeping revenue and cash levels healthy even as global jet fuel prices doubled against the same period last year,” he added.

Workforce was cut by two percent over the six months to 128,237 employees.

Since the war began in late February, energy prices have soared as Iran’s blockade on ships in the vital Strait of Hormuz disrupted supply.

The Gulf has put connecting traffic at the core of its aviation model, linking markets in the Americas, Europe, Asia and Oceania. Last year, nearly one in six transit travellers worldwide passed through the Middle East.

Staying In Profit ‘Remarkable’

Emirates airline saw half-year profit after tax fall 66 percent to 903 million, eroded by high fuel prices. Airline revenues were down 13 percent.

“Emirates staying profitable, despite the backdrop of a war that has no conclusion is pretty remarkable,” agreed Saj Ahmad, chief analyst at StrategicAero Research.

“Add in the fact that the airline is slowly re-establishing its full network too, the decline in passenger numbers due to the US-Iran war is not a surprise.”

Emirates carried 21.8 million passengers between April and September, 22 percent less than a year earlier, compared with the same period in the previous fiscal year.

Cargo operations, by contrast, were resilient, with revenue up 52 percent despite a slight decline in volumes transported.

Sheikh Ahmed said he was starting the second half of the fiscal year with “measured optimism” while maintaining “a close watch on costs and geopolitical developments”.

The group was able to tap strong cash reserves to support its business needs, including pre-delivery payments for aircraft and servicing debt obligations, it said.

Emirates airline has launched initiatives to boost customer confidence following the outbreak of war, including comprehensive travel insurance that is unrestricted by government travel advisories, free date changes on booked tickets, and generous refund policies.

It also broke ground in May on a $5.1 billion engineering and maintenance facility at Al Maktoum International Airport in Dubai, with completion expected in the mid-2030s.

“The fundamentals for the GCC aviation industry remain robust,” said Ahmad.

“But the longer the conflict drags on, the impact is more likely to be felt across all GCC states,” he said, especially in Saudi Arabia, where airports have become regular targets for Houthi attacks.

AFP