Emirates makes $ 237 million profit (down 69%)

In March, Etihad announced horrendous financial results compared to last year, with the airline losing $ 1.28 billion, bringing its losses over the past three years to nearly $ 5 billion. The worst thing is that this happened after Etihad launched a cost reduction program, which shows how much more needs to be done.

Well, Emirates today released its financial results for the year ending March 31, 2019. a lot better than Etihad.

Emirates announces a profit of 237 million dollars

I will limit myself here to the results of Emirates, rather than the results of the Emirates Group, which includes dnata (their airport service provider). Emirates reported a profit of $ 237 million in the last year:

• Emirates profits are down 69% from the previous year
• Profit of $ 237 million represents a profit margin of 0.9%

Emirates A380

Why Emirates profits have decreased

Emirates attributes the decline in profits to:

• Fierce competition in major markets
• Unfavorable exchange rate impact as the US dollar strengthened against many of Emirates' key markets, which they claimed cost them $ 156 million; Interestingly, the previous year, Emirates estimated the positive impact of currency fluctuations at $ 180 million.
• Increased fuel costs, with the average price of jet fuel increasing 22% after increasing 15% the previous year; Emirates' fuel bill for the year is $ 8.4 billion, which represents 32% of their operating costs.

The new 777-300ER class from Emirates

Key figures of the performance of Emirates

Let's look at some other key figures for Emirates for the past year:

• Revenues increased 6% to $ 26.7 billion
• Seat capacity increased by 4%
• Emirates increased its fleet by one net of two aircraft taking delivery of 13 aircraft (seven A380s and six 777-300ERs) and removed 11
• The average age of the fleet of 270 Emirates aircraft is 6.1 years.
• Emirates carried 58.6 million passengers (+ 0.2%)
• The average load factor was 76.8%, down slightly from 77.5% the year before
• Average return per passenger increased by more than 3% to 7.1 US cents per passenger kilometer

It is also interesting to note the contribution of different regions to Emirates turnover, with no region contributing more than 30%:

• Europe generated revenue of $ 7.7 billion (up 6%)
• East Asia and Australasia generated revenues of $ 7.2 billion (up 5%)
• The Americas generated $ 3.9 billion (+ 8%)
• Africa generated $ 2.8 billion (up 9%)
• Gulf and Middle East revenues generated $ 2.3 billion (down 3%)
• Revenues from West Asia and the Indian Ocean generated $ 2.2 billion (up 6%)

Emirates took delivery of its latest 777-300ER aircraft last year

Is this just fake math?

When I write about the financial performance of the Gulf carriers, one always wonders whether it's just imaginary calculations, since Gulf carriers belong to the state.

After all, US airlines have spent millions of dollars trying to convince us that it is heavily subsidized airlines that are losing billions of dollars.

My personal point of view is that these results are for the most part accurate. After all, Emirates results are independently audited in accordance with International Financial Reporting Standards.

However, it is clear that airlines like Emirates have benefited from certain things over the years:

• No doubt they had easier access to funding because of their state affiliation, which allowed them to grow as much and as quickly as they did.
• Their operating costs are much lower than those of other airlines, since they have essentially the same ownership as the airport, the ground service providers, the catering companies, and so on.

I think Emirates is "legitimately" profitable. The problem with the A380 for most airlines is that they have not been able to evolve their operations in a way that works. Emirates has been able to expand its network of lines like no other airline.

Obviously, Etihad and Qatar do not have the same success, because the two airlines lose a lot of money.

While we are talking about airlines that have advantages because of their home countries, let us keep in mind the US airlines that have benefited from the protection of the bankruptcy law, to the detriment of their employees and their creditors (just ask American employees of these airlines decades ago about their pensions).

Bottom line

All in all, the performance of Emirates for the past year is quite impressive, especially considering the currency issues and rising fuel prices they have faced. While their rivals continue to lose money (Etihad because it is a criminal record, and Qatar because of the blockade and other factors), Emirates has expanded its road network in a sensible way .