- Solid business growth in line with capacity increases leading to a record revenue of more than AED 100 billion (US$ 27.2 billion) for the 1st time
- Improved cash balance of AED 25.4 billion (US$ 6.9 billion)
- Declares a dividend of AED 2.0 billion (US$ 545 million) to the Investment Corporation of Dubai
Emirates reports a profit of AED 2.8
billion (US$ 762 million), 124% better than the previous year
- Airline capacity crosses 61 billion ATKM with a net addition of 9 new aircraft to the fleet
- Revenue increases by 9% to AED 92.3 billion (US$ 25.2 billion), supported by strong cargo performance
dnata makes highest profit
ever, at AED 1.3 billion (US$ 359 million)
- Record revenue of AED 13.1 billion (US$ 3.6 billion) reflects further business expansion, with international business now accounting for 68% of revenue .
- Expands global footprint with ground handling acquisitions in the Americas, adds new facilities and service capabilities across its airport operations, catering, and travel services divisions
DUBAI, UAE, 9 May 2018 - The Emirates Group today announced its 30th
consecutive year of profit and steady business expansion.
Released today in its 2017-18 Annual Report, the Emirates Group posted a profit
of AED 4.1 billion (US$ 1.1 billion) for the financial year ended 31 March
2018, up 67% from last year. The Group’s revenue reached AED
102.4 billion (US$ 27.9.billion), an increase of 8% over last year’s results,
and the Group’s cash balance increased by 33% to AED 25.4
billion (US$ 6.9 billion) supported by the bond issued in March and strong
sales due to the early Easter holidays at the end of March.
In line with the overall profit, the Group declared a dividend
of AED 2.0 billion (US$ 545 million) to the Investment Corporation of Dubai.
His Highness (H.H.) Sheikh Ahmed bin Saeed Al Maktoum,
Chairman and Chief Executive, Emirates Airline and Group, said: “Business
conditions in 2017-18, while improved, remained tough. We saw ongoing political
instability, currency volatility and devaluations in Africa, rising oil prices
which drove our costs up, and downward pressure on margins from relentless
competition. On the positive side, we benefitted from a healthy recovery in the
global air cargo industry, as well as the relative strengthening of key
currencies against the US dollar.
“We’ve always responded to the challenges of each
business cycle with agility, while never losing sight of the future, and this
year was no exception. In 2017-18, Emirates and dnata delivered our 30th
consecutive year of profit, recorded growth across the business, and continued
to invest in initiatives and infrastructure that will secure our future
success.”
In 2017-18, the Group collectively
invested AED 9.0 billion (US$ 2.5 billion) in new aircraft
and equipment, the acquisition of companies, modern facilities, the latest
technologies, and staff initiatives.
Emirates announced two significant commitments for new
aircraft during the year: a US$ 15.1 billion agreement for 40 Boeing 787-10
Dreamliners which will be delivered from 2022, and a US$ 16 billion agreement
for 36 additional A380 aircraft, including 16 options.
dnata’s key investments during the year included: acquisition
of AirLogistix USA, marking its entry in the US cargo market; expansion of
cargo handling capabilities with new warehouses and equipment at London
Gatwick, Amsterdam-Schiphol, and Adelaide; new catering facilities in Dublin
and Melbourne; and new marhaba lounges in Karachi and Melbourne.
Sheikh Ahmed said: “While expanding our business and
growing revenues, we also tightened our cost discipline. Across the Group, we
progressed various initiatives to rebuild and streamline our back office
operations with new technology, systems and processes. In 2017-18, our reduced
recruitment activity, coupled with restructured ways of working gave us gains
in productivity, and a slowdown in manpower cost increases.”
Across its more than 80 subsidiaries, the Group’s total
workforce declined by 2% to 103,363, representing
over 160 different nationalities, as part of the overall productivity
improvement initiatives in Emirates and dnata.
Sheikh Ahmed concluded: “Looking ahead, Emirates and
dnata remain focussed on delivering safe, efficient and high quality services
consistently to our customers. Our ongoing investments in our people,
technology, and infrastructure will help us maintain our competitive edge, and
ensure that we are ready to meet the opportunities and stay on course for
sustainable and profitable growth.”
Emirates performance
Emirates’ total passenger and cargocapacity
crossed the 61 billion mark, to 61.4 billion ATKMs at the end of 2017-18,
cementing its position as the world’s largest international carrier. The
airline moderately increased capacity during the year over 2016-17 by 2%, with
a focus on yield improvement.
Emirates received 17 new aircraft,
after last year’s record number during a financial year, comprising of eight
A380s and nine Boeing 777-300ERs. At the same time, eight older aircraft were
phased out, bringing its total fleet count to 268 at the end of March. This
fleet roll-over involving 25 aircraft was again one of the largest managed in a
year, keeping Emirates’ average fleet age at a youthful 5.7 years.
It underscores Emirates’ strategy to operate a young
and modern fleet which is better for the environment, better for operations,
and better for customers. The airline remains the world’s largest operator of
the Boeing 777 and A380 – both aircraft being amongst the most modern and
efficient wide-bodied jets in the sky today.
During the year, Emirates launched two new
passenger destinations: Phnom Penh (Cambodia) and Zagreb (Croatia). It also
added flight capacity to 15 existing destinations, offering customers more
choice of flight timings and onward connections.
Emirates also grew its global connectivity and
customer proposition through strategic partnerships. During
2017-18, Emirates entered into significant partnerships with flydubai and
Cargolux, expanding the choice of air services on offer to passenger and cargo
customers respectively. Emirates also received authorisation to extend its
partnership with Qantas until 2023.
In spite of political challenges impacting traveller
demand and fare adjustments due to a highly competitive business environment,
Emirates managed to increase its revenue to AED 92.3
billion (US$ 25.2 billion). The decline of the US dollar against
currencies in most of Emirates’ key markets for the first time in a number of
years had an AED 661 million (US$ 180 million) positive impact to the airline’s
bottom line.
Total operatingcosts increased
by 7% over the 2016-17 financial year. The average price of jet fuel
increased sharply by 15% during the financial year. Including a 3% higher
uplift in line with capacity increase, the airline’s fuel bill
increased substantially by 18% over last year to
AED 24.7 billion (US$ 6.7 billion). Fuel is now 28% of
operating costs, compared to 25% in 2016-17, and it remained the biggest cost
component for the airline.
The airline successfully managed strong competitive
pressure across all markets and increased its profit to AED
2.8 billion (US$ 762 million), an increase of 124% over last year’s results,
and a profitmargin of 3.0%.
Overall passenger traffic growth continues to
demonstrate the consumer desire to fly on Emirates’ state-of-the-art aircraft,
and via efficient routings through its Dubai hub.
Emirates carried a record 58.5 million passengers
(up 4%), and achieved a Passenger Seat Factor of 77.5%. The
increase in passenger seat factor compared to last year’s 75.1%, is a result of
successful capacity management in response to political uncertainty and strong
competition in many markets despite a moderate 2% increase in seat
capacity.
Supported by the weakening of the USD against most
currencies, passenger yield increased to
25.3 fils (6.9 US cents) per Revenue Passenger Kilometre (RPKM).
To fund its fleet growth during the year with high
ongoing new aircraft deliveries, Emirates raised AED 17.9 billion (US$ 4.9
billion), using a variety of financing structures, including the successful
execution of a US$ 600 million sukuk in March to fund the acquisition of two
A380 aircraft to be delivered in 2018.
Emirates continues to tap the Japanese structured
finance market in conjunction with debt from a wide-ranging group of
institutions in China, France, the United Kingdom, and Japan. The company raised
in excess of AED 3.7 billion (US$ 1 billion) during the year from this source.
Emirates has also refinanced a commercial bridge facility (due to
non-availability of ECA cover) of AED 3.8 billion (US$ 1.0 billion) via an
innovative finance lease structure for five A380-800 aircraft, accessing an
institutional investor and bank market base from Korea, Germany, the United
Kingdom and the Middle East.
These deals align with Emirates’ financing strategy
and demonstrates its ability to unlock diverse financing sources through access
to global liquidity. It also underscores its sound financials and the strong
investor confidence in the airline’s business model.
Emirates closed the financial year with a healthy and
increased level of AED 20.4 billion (US$ 5.6 billion) of cash assets.
Revenue generated from across Emirates’ six regions continues to be well balanced, with no region
contributing more than 30% of overall revenues. Europe was the highest revenue
contributing region with AED 26.7 billion (US$ 7.3 billion),
up 12% from 2016-17. East Asia and Australasia follows closely with AED 25.4
billion (US$ 6.9 billion), up 12%. The Americas region recorded revenue growth
at AED 13.4 billion (US$ 3.7 billion), up 7%. Gulf and Middle East revenue
decreased by 2% to AED 8.5 billion (US$ 2.3 billion) whereas revenue for Africa
increased by 8% to AED 9.4 billion (US$ 2.6 billion). West
Asia and Indian Ocean revenue increased by 5% to AED 7.8 billion (US$ 2.1
billion).
Through the year, Emirates introduced product and
service improvements on board and on the ground.
Key highlights include: the launch of fully-enclosed
suites in First Class together with refreshed Business Class and Economy Class
cabins on the 777-300ER aircraft; new, wider Business Class seats arranged in a
2-2-2 layout on the 777-200LR aircraft; and a refreshed version of the popular
Onboard Lounge on the Emirates A380.
On the ground, Emirates added a new dedicated lounge
in Boston for its premium passengers and frequent flyers; refurbished existing
lounges in Singapore and Bangkok, and completed a US$ 11 million makeover of
its lounges in Dubai airport Concourse B.
Emirates also invested in new channels and technology
to offer even better and more personalised customer experiences online, on
mobile, as well as via its retail and contact centres.
For 2018-19, Emirates has announced new routes to
London Stansted in the UK, Santiago in Chile, Edinburgh in Scotland, and an
additional flight between Dubai and Auckland via Bali, aside from capacity
upgrades to existing destinations.
Emirates SkyCargo recorded a strong performance in a resurgent market,
and continues to play an integral role in the company’s expanding operations,
contributing 14% of the airline’s total transport revenue.
In an airfreight market with fast-changing demand
patterns, Emirates’ cargo division reported a revenue of AED
12.4 billion (US$ 3.4 billion), an impressive increase of 17% over last year,
while tonnage carried slightly increased by 2% to reach 2.6
million tonnes.
This year, freight yield per Freight
Tonne Kilometre (FTKM) increased by 14%, reflecting a very positive market
environment for the industry, and the weakening of the USD against major
currencies.
Emirates’ SkyCargo’s total freighter fleet stood
at 13 Boeing 777Fs. In addition to belly-hold capacity to Emirates’ new
passenger destinations, Emirates SkyCargo launched new freighter services to
Maastricht (Netherlands), Luxembourg, and Aguadilla (Puerto Rico).
Emirates SkyCargo continued to develop innovative,
bespoke products tailored to key industry sectors. In November, it signed an
MoU with Dubai CommerCity to develop new solutions for the e-commerce sector
using Dubai as a hub.
During the year, Emirates SkyCargo launched Emirates
Fresh for perishable commodities such as fresh cut flowers, fruits and
vegetables. For temperature-sensitive Pharma products, Emirates SkyCargo rolled
out a pharma corridors programme to offer enhanced origin-to-destination
protection, and it also partnered with DuPont to introduce White Cover Xtreme,
a next generation thermal blanket to protect sensitive cargo.
Emirates’ hotels recorded revenue of
AED 746 million (US$ 203 million), a moderate increase of 1% over last year in
a highly competitive market mainly in the UAE.
dnata performance
In its 59 years of operation, 2017-18 has
been dnata’s most profitable year, crossing AED 1.3 billion (US$ 359 million) profit
for the first time. Building on its strong results in the previous year,
dnata'srevenue grew to AED 13.1 billion
(US$ 3.6 billion), up 7%. dnata’s international business now accounts for
68% of its revenue.
The strong performance was achieved through organic
growth with key contract wins coupled with solid customer retention across its
four business divisions, as well as the impact of acquisitions from previous
year.
dnata continued to lay the foundations for future
growth by investing AED 600 million in new facilities and equipment,
acquisitions, leading-edge technologies and people development.
One of its key initiatives in 2017-18 was to embark on
the journey to implement a new Enterprise Resource Planning (ERP) solution that
will transform its business support functions, and provide real time information
to enable better decision making, governance, efficiency and scalability for
continued growth and expansion.
In 2017-18, dnata’s operating costs
increased accordingly by 8% to AED 11.9 billion (US$ 3.2 billion),
reflecting the impact of organic growth across all lines of business coupled
with integrating the newly acquired companies mainly across its international
airport operations.
dnata’scash balance reached AED 4.9
billion (US$ 1.3 billion), a new record high. The business delivered an AED 1.9
billion (US$ 506 million) cash flow from operating activities in 2017-18, which
is also a new record in line with the enhanced cash balance.
Revenue from dnata’s UAE Airport
Operations, including ground and cargo handling increased by 4% to
reach AED 3.2 billion (US$ 859 million).
The number of aircraft movements handled by dnata in
the UAE declined by 2% to 211,000 impacted by the geopolitical situation in the
region, whereas Cargo handling increased by 2% to 731,000 tonnes, supported by
the strong overall air cargo market.
In addition to the steady delivery of initiatives
started in 2014 to optimise its operations, covering facility improvements,
process changes, infrastructure upgrades and IT development, dnata also
successfully tested the use of blockchain technology to further streamline and
simplify its cargo delivery processes from origin to final destination.
dnata’s International Airport Operations division grew revenue by 14% to AED 3.8 billion
(US$ 1.0 billion), on account of increasing business volumes, opening
of new locations and winning new contracts.
International airport operations continue to represent
the largest business segment in dnata by revenue contribution. The number of
aircraft handled by the division further increased substantially by 10% to
449,000, and Cargo noted a substantial growth of 10% to 2.4 million tonnes of
handled goods.
dnata continued to win over customers with its high
quality standards, inking over 90 contracts with new and existing customers
during the year.
During the year, dnata made significant investments
which expanded its capability and global presence. In May, dnata entered the US
cargo market with its acquisition of AirLogistix USA. The investment includes
state-of-the-art cargo handling facilities in Houston and Dallas Fort-Worth.
dnata also expanded its cargo handling capabilities at Gatwick, opened an
additional cargo warehouse in Schiphol, and a new airside cargo facility in
Adelaide.
In the US, it received a new licence to provide ground
handling services at John F. Kennedy International Airport’s (JFK) Terminal 4;
and it commenced operations at JFK’s Terminal 8. In Singapore, dnata began
operations at Singapore Changi Airport’s new Terminal 4; and opened a new
maintenance base for ground service equipment.
dnata’s Catering business accounted for AED 2.1 billion
(US$ 585 million) of its total revenue, up 7%. The inflight catering
business uplifted more than 55 million meals to airline customers.
During the year, dnata opened a state-of-the-art
catering hub at Melbourne airport, the largest such facility in the southern
hemisphere, and a second catering facility in Ireland at Dublin airport. It
also entered the Canadian market when it was awarded a licence to provide
flight catering services to airlines departing Vancouver International Airport,
and has commenced plans to build a dedicated catering facility there.
dnata strengthened its presence in the North American
market with the acquisition of 121 in-flight catering, a New York-based
in-flight and VIP caterer in March. This is pending approval from the Committee
of Foreign Investments in the United States (CFIUS). In April 2018, dnata
announced the acquisition of Qantas’ catering business, subject to the approval
of the Australian Competition and Consumer Commission.
Revenue from dnata’s Travel Services
division has seen a turnaround after last year’s decline with an increase of 8%
to AED 3.4 billion (US$ 922 million). The underlying total
transaction value (TTV) of travel services sold increased by 6% to AED 11.3
billion (US$ 3.1 billion).
This solid performance was supported by dnata’s
ability to tap on the upswing in both inbound and outbound tourism demand in
the Middle East, and a healthy increase in long-haul travel and cruise bookings
in Europe and Australia.
In 2017-18, dnata completed its acquisition of a stake
in Destination Asia, a leading destination management company with operations
across 11 Asian countries, making its entry into South East Asia’s inbound
travel market. Its UK-based Imagine Cruising business, completed a successful
first year of trading in Australia, and acquired Holiday Planet, a leading
travel company in Perth to boost growth in this market.
During the year, dnata invested in technology to
provide enhanced functionality and a better service experience for its partners
and customers. This included the creation of two travel reservation systems for
Emirates Holidays and dnata Travel’s B2B business, to replace existing ones.
The full 2017-18 Annual Report of the Emirates Group –
comprising Emirates, dnata and their subsidiaries – is available at: www.theemiratesgroup.com/annualreport
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