Emirates’ Profits Drop 70%, Cites US Restrictions

0

Demola Ojo with agency reports

Amid shifting global economic forces, political change, and security issues, Emirates, the Dubai-based airline is feeling the squeeze. As an annual report from the Emirates Group reveals, profits for the airline dropped by over 70 per cent over the past fiscal year, a change the airline attributes to forces beyond its control, including a number of Trump administration policies placing restrictions on travel from the Middle East.

The Emirates Group—which runs the airline and dnata, a ground services provider—still posted an overall profit this year of $670 million, but as Reuters reports, it’s the first year-over-year decline in the past five years. The group said that its 29th consecutive year of profit was achieved “despite a turbulent year for aviation and travel”.

 Sheikh Ahmed bin Saeed Al Maktoum, a member of Dubai’s ruling family and the CEO and chairman of Emirates Group, attributes the 70 percent drop in overall profits to a number of global events, but says prior success fueled the company’s resilience:

“We now reap the benefits as these strong foundations have helped us to weather the destabilizing events, which have impacted travel demand during the year—from the Brexit vote to Europe’s immigration challenges and terror attacks, from the new policies impacting air travel into the US, to currency devaluation.” Al Maktoum also points to the effect of a “sluggish” oil and gas industry on overall business confidence.

The “new policies” Al Maktoum references include President Trump’s travel ban for citizens of six Muslim-majority countries and, perhaps most significantly, a March DHS regulation that bans passengers flying from eight Muslim-majority countries in the Middle East and North Africa, including the UAE, from carrying large electronics in their carry-ons.

“We remain optimistic for the future of our industry, although we expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” he continued.

Emirates which was on an aggressive push to expand offerings to the United States, quickly reacted to the electronics ban by loaning laptops to all passengers on Dubai-US routes, but it apparently wasn’t enough. Last month, the airline cut the frequency of five of its 12 US routes.

The Emirates airline division reported a record 56.1 million passengers over the year (up 8 per cent) – load factor was 75.1 per cent (down from 76.5 per cent the previous year), although the carrier said that this was “relative to the strong 10 per cent increase in seat capacity by Available Seat Kilometres (ASKMs), and also in part due to lingering economic uncertainty and strong competition in many markets”.

The group also said that “The relentless rise of the US dollar against currencies in most of Emirates’ key markets had an AED 2.1 billion (US$ 572 million) impact on airline revenue, and to the airline’s bottom line”.

A total of 35 new aircraft were delivered during the financial year (19 A380s and 16 B777-300ERs), with 27 older aircraft being retired, and Emirates moved to an all-A380 and B777 fleet.

The carrier also launched six new passengers destinations over the period – Fort Lauderdale, Hanoi, Newark, Yangon, Yinchuan and Zhengzhou.