Emirates airline posts record $4.7 billion profit on soaring travel demand

The Dubai airline's business outlook is 'positive', with demand to 'remain strong' in coming months

Emirates Group announced a Dh4 billion dividend for the Dubai government. Victor Besa / The National

Emirates, the world's largest long-haul airline, is in a "strong position" for future growth after it posted a record annual profit by expanding its route network and increasing capacity to meet strong global travel demand.

The airline is optimistic about demand remaining strong in the coming months, while it will monitor costs, fuel prices and the impact of sociopolitical changes, it said on Monday.

Emirates posted a profit of Dh17.2 billion ($4.7 billion) in its financial year that ended on March 31, up 63 per cent from Dh10.6 billion profit in the previous year, driven by a "voracious appetite" for travel across customer segments, it said.

Revenue jumped by 13 per cent on an annual basis to Dh121.2 billion, despite the impact of currency fluctuations, as the airline carried more passengers during the year.

“Throughout the year, we saw high demand for air transport and travel-related services around the world, and because we were able to move quickly to deliver what customers want, we achieved tremendous results,” Sheikh Ahmed bin Saeed, chairman and chief executive of Emirates airline and Group, said.

“We are reaping the benefit of years of non-stop investments in our products and services, in building strong partnerships, and in the capabilities of our talented people.”

The Emirates Group also announced a Dh4 billion dividend for its owner, the Investment Corporation of Dubai.

The airline's financial performance comes amid a rebound in international travel after the Covid-19 pandemic.

Dubai recorded an 11 per cent increase in tourist numbers from January to March this year as the emirate continued to benefit from a rebound in global travel demand.

The city hosted 5.18 million international overnight visitors in the first quarter of 2024, compared with 4.67 million tourist arrivals during the same period a year earlier, according to data published by the Dubai Department of Economy and Tourism on May 6.

Dubai is building a new passenger terminal at Al Maktoum International – the emirate's second airport also known as Dubai World Central – as its main hub, Dubai International, inches closer to full capacity.

Emirates said it carried 51.9 million passengers, 19 per cent more than the previous financial year, while its seat capacity increased by 21 per cent.

Passenger seat factor, a measure of how well an airline fills available seats, rose to 79.9 per cent, compared with 79.5 per cent in its last financial year.

The airline restarted services to Tokyo Haneda airport, added capacity to 29 destinations and launched new daily flights to Montreal, Canada.

Emirates also signed new codeshare and interline agreements with 11 airlines, further extending its network’s reach.

As of March 31, its network spanned 151 destinations, including 10 cities served by its freighter fleet only.

Industry headwinds

The carrier's performance comes amid a challenging operating environment for airlines, including high fuel prices, economic uncertainty and the Israel-Gaza war that has continued for more than seven months.

Emirates' passenger yield declined 2 per cent to 36.6 fils per revenue passenger kilometre (RPKM), due to a change in cabin and route mix, fares and currency, the airline said.

Profitability took a Dh2 billion hit due to currency fluctuations and devaluations in some of its major markets, mainly in Pakistan, Egypt and India.

"Emirates continued with its balanced approach to managing the foreign exchange rate risk through use of currency options, forward contracts and natural hedges," it said.

Emirates' total operating costs increased 8 per cent year-on-year, mainly on higher cost of ownership (depreciation and amortisation of aircraft), fuel costs and employee cost.

Fuel accounted for 34 per cent of operating costs, compared with 36 per cent in the previous year.

The airline’s fuel bill increased slightly to Dh34.2 billion, from Dh33.7 billion in the previous year. A higher fuel uplift of 24 per cent due to increased flying was balanced by a lower average fuel price (down 18 per cent) including hedging gains, it said.

"In response to the challenges posed by volatile fuel markets during the financial year, Emirates deployed simple forwards and options across different products such as Brent and jet fuel to reduce current year costs as well as secure significant future hedging volumes," it said.

It also "largely mitigated" the effects of the higher interest rates on its results with effective management of the net exposure.

Still, the airline closed the year with its highest level of cash assets at Dh42.9 billion, up 15 per cent compared with the end of March 2023.

The airline said its strong performance enabled it to meet all its regular aircraft-related payment obligations and repaid an additional Dh2.2 billion from the Dh17.5 billion borrowed during the Covid-19 pandemic.

This reduced its overall outstanding debt and “places the airline on a strong foundation” for financing for its future growth and the new fleet acquisition programme, it said.

Emirates will receive 10 new Airbus A350 aircraft in 2024-2025, adding the aircraft type to its fleet for the first time. The delivery will support the next phase of its network growth.

Emirates’ order book stands at 310 aircraft, after it announced orders worth $58 billion at list prices, for 110 additional Boeing 777s, Boeing 787s and Airbus A350s at the Dubai Airshow in November 2023.

Record group profit

Emirates Group, which includes global airport services company Dnata, posted a record profit of Dh18.7 billion, a jump of 71 per cent year on year.

Group revenue increased by 15 per cent on an annual basis to a record Dh137.3 billion, driven by strong customer demand across its businesses, it said.

The group ended the financial year with its highest cash balance yet of Dh47.1 billion.

Dnata's profit quadrupled to Dh1.4 billion amid growth across its business divisions, while its revenue rose by 29 per cent to a record Dh19.2 billion.

In terms of air freight, Emirates' cargo arm carried 2.2 million tonnes of goods, up 18 per cent from the previous year, as increased passenger operations expanded the available belly-cargo capacity. The leasing of three Boeing 747 freighters unlocked immediate capacity to serve demand on busy routes.

Emirates SkyCargo's revenue reached Dh13.6 billion, contributing 11 per cent to the airline’s total revenue. However, cargo yield per freight tonne kilometre (FTKM) declined 32 per cent, returning to pre-pandemic market levels.

Emirates Group’s total workforce grew 10 per cent to 112,406 employees, reaching its largest size ever, as the airline and dnata continued to hire staff around the world to support expanding operations and bolstering future capabilities, it said.

'Positive' outlook

Looking to the future, Emirates is bullish on continued future growth. "The business outlook is positive and we expect customer demand for air transport and travel to remain strong in the coming months," Sheikh Ahmed said.

The airline assessing external headwinds and is confident about coping with challenges.

"As always, we will keep a close watch on costs and external factors such as oil prices, currency fluctuations and volatile environments caused by sociopolitical changes," Sheikh Ahmed said.

"Our business model has been tested before, and I am confident in our resilience and ability to respond quickly to opportunities and challenges.”

Dubai's plans to build a new passenger terminal at Al Maktoum International Airport, which is to become the new hub for Emirates and dnata’s operations, will "significantly expand" the city's aviation and logistics infrastructure and support the growth of Emirates’ and dnata’s growth, he added.