Emirates Group reports record profits of $2.7 billion

Saifur Rahman, Executive Editor

State-owned Emirates Group — which includes Emirates Airline, the world’s biggest carrier of international passengers and its ticketing and ground handling subsidiary Dnata, reported a 138 percent jump in profits to a record Dh10.1 billion (US$2.7 billion), for the first half of the 2023-2024 financial starting from April 2023 till September 30, 2023, compared to Dh4.2 billion (US$1.2 billion) reported for the corresponding period last year, driven by strong demand for international passengers globally.

Emirates Group revenue increased 20 percent to Dh67.3 billion (US$18.3 billion) for the first six months of 2023-24, up from Dh56.3 billion (US$15.3 billion) last year.

Of this, Emirates Airline reported 134 percent jump in net profits to Dh9.4 billion (US$2.6 billion), up from Dh4 billion (US$1.1 billion) on Dh59.5 billion (US$16.2 billion) revenue that was up 19 percent compared with the Dh50.1 billion (US$13.7 billion) in the corresponding period last year.

“The airline’s record performance is attributable to the strong passenger demand for international travel across markets and Emirates’ ability to activate capacity to match demand; and offer customers great value and services,” the airline said in a statement.

Overall profit for Dubai National Air Travel Agency (Dnata) jumped 200 percent to Dh709 million (US$193 million), compared to same period last year’s Dh236 million (US$64 million). Dnata’s revenue, including other operating income, of Dh9.3 billion (US$2.5 billion) increased by 27 percent compared to Dh7.3 billion (US$2.0 billion) generated in the same period last year.

Emirates Group and Airlines first-half results echo the assessment of the International Air Transport Association (IATA) made recently about the resurgence of air travel worldwide.

IATA recently said, “The industry is returning to profitability in 2023, only three years after the historic loss of US$140 billion in 2020. Total airline revenue is expected to recover to around 93 percent of the 2019 figure, with operating profits reaching US$22.4 billion. The net profit forecast for this year is US$9.8 billion, and the net margin a slim 1.2 percent. This equates to US$2.25 per passenger.

“Overall, this performance shows how resilient the industry is, being able to bounce back so rapidly from a near total halt. It does, however, also show that robustness could be improved, in the interest of stronger balance sheets and safer profit margins.”

Looking forward, the demand for air travel is expected to double by 2040, growing at an annual average rate of 3.4 percent. Origin-destination passengers are projected to increase from around 4 billion in 2019 to just over 8 billion at the end of the forecast horizon, IATA said.

Emirates Group also reported Earnings Before Interest, Tax, Debt and Amortisation (EBITDA) of Dh20.6 billion (US$5.6 billion), a significant improvement from Dh15.3 billion (US$4.2 billion) during the same period last year, illustrating its strong operating profitability.

Emirate’s Group’s cash position at the end of September 30, 2023, rose marginally to Dh42.7 billion (US$11.6 billion), compared to Dh42.5 billion (US$11.6 billion) on 31 March 2023. The Group has been able to tap on its own strong cash reserves to support business needs, including debt payments. So far, Emirates has repaid Dh9.2 billion of its COVID-19 related loans. The Group also paid Dh4.5 billion in dividend to its owner, as declared at the end of its 2022-23 financial year.

Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group said: “We are seeing the fruition of our plans to return stronger and better from the dark days of the pandemic. The Group has surpassed previous records to report our best-ever half-year performance. Our profit for the first six months of 2023-24 has nearly matched our record full year profit in 2022-23.

“This is a tremendous achievement that speaks to the talent and commitment within the organisation, the strength of our business model, and power of Dubai’s vision and policies that has enabled the creation of a strong, resilient, and progressive aviation sector.

“Across the Group, we’ve continued to ramp up operations safely and move nimbly to meet customer demand. We’ve implemented a series of service and product enhancements to win customer preference, and we’ll continue to invest in our people, products, partnerships, and technology to strengthen our capabilities and ensure we are future ready.”

Driven by strong demand and increased operations during the six months, Emirates’ EBITDA grew by 33 percent to Dh19.5 billion (US$5.3 billion) compared to Dh14.7 billion (US$4.0 billion) for the same period last year.

Emirates Airline said, it continued to increase its global flight operations, adding capacity and connections through its Dubai hub to meet customer demand across markets. During the first half of 2023-24, the airline restored A380 operations to Bali, Beijing, Birmingham, Casablanca, Nice, Shanghai, and Taiwan. In July, it launched daily non-stop services to Montreal, a new destination and the airline’s second gateway in Canada.

Expanding connectivity options for customers, Emirates entered and enhanced codeshare or interline agreements with 8 airlines in the first six months of 2023-24: Aegean Airlines, Air Canada, Etihad Airways, Kenya Airways, Philippine Airlines, Maldivian, Sri Lankan Airlines, and United Airlines. The codeshare partnership between Emirates and Qantas, which has seen over 15 million travellers benefit from joint flight itineraries since its establishment in 2013, received approvals for a further 5-year extension until 2027.

By 30 September, the airline was operating passenger and cargo services to 144 airports, utilising its entire Boeing 777 fleet and 104 A380s. During the first six months of 2023-24, 10 A380 aircraft rolled out of Emirates’ retrofit programme with completely refreshed cabin interiors and latest onboard products including Premium Economy seats. This enabled the airline to deploy its highly sought-after Premium Economy services on more new routes including New York JFK, Houston, San Francisco, Los Angeles, and Singapore.

Emirates carried 26.1 million passengers between 1 April and 30 September 2023, up 31 percent from the same period last year. Emirates Skycargo uplifted 1,035,000 tonnes in the first six months of the year, an 11 percent increase compared to the same period last year despite an overall softening in the global cargo market.

Emirates’ direct operating costs (including fuel) grew by 9 percent in line with increased operations. Fuel remains the largest component of the airline’s operating cost (34%), compared to 38 percent in the same period last year.

Dnata continued to ramp up operations across its cargo and ground handling, catering and retail, and travel services businesses. This drove strong revenue growth in the first six months of 2023-24.

In the first half of 2023-24, Dnata’s catering and airport services won significant new contracts and grew existing customers across its international operations. This shows Dnata’s ability to serve the growing operations of airline customers, and deliver high quality products and services despite lingering operational challenges in many markets such as a shortage of skilled workforce, supply chain issues, and inflationary pressures.

Dnata also continued to make strategic investments in its business and implement innovative technology and other initiatives to better respond to customer needs. Highlights in the first half of 2023-24 include: the acquisition of an additional 29 percent stake in Imagine Cruising, bringing to 81.4 percent its shareholding in UK’s leading cruise and stay holiday distributors; the implementation of AI-powered solutions to enhance Dnata’s cargo handling operations and capabilities in Singapore; and the switch to a biofuel blend for road transport vehicles in the UAE used by Dnata Logistics, Arabian Adventures, Alpha Flight Services, and City Sightseeing to reduce emissions and address rising customer expectations for transport options with lower environmental footprint.

Dnata’s airport operations remains the largest contributor to revenue with Dh4.1 billion (US$1.1 billion), an 18 percent increase compared to the same period last year, as its airline customers’ operations continued to pick up particularly in Australia, Singapore, UK, and the UAE. Across its operations, the number of aircraft turns handled by dnata increased by 11 percent to 384,656, and it handled 1.3 million tonnes of cargo, down by 5 percent reflecting further softening of the global air freight market after a pandemic-driven surge.

Dnata’s flight catering and retail operations, contributed Dh3.5 billion (US$942 million) to its revenue, up 45 percent with strong production increases in Australia, Italy, UK, and the US to meet customer demand. The number of meals uplifted increased by 31 percent to 66.3 million meals compared to last year’s 50.5 million meals.

Dnata’s travel division contributed Dh1.4 billion (US$375 million) to revenue, up 16 percent compared to Dh1.2 billion (US$ 323 million) for the same period last year. Dnata saw strong contributions from Destination Asia, its destination management business in Asia; and from its cruise holidays business, Imagine Cruising, in which Dnata has acquired controlling interest. The division reported an underlying total transactional value (TTV) sales of Dh4.0 billion (US$ 1.1 billion), compared to Dh3.5 billion (US$960 million) for the same period last year.

Sheikh Ahmed added: “For the second half of 2023-24, we expect customer demand across our business divisions to remain healthy and we will stay agile in how we deploy our resources in this dynamic marketplace. At the same time, we are keeping a close watch on headwinds such as rising fuel prices, the strengthening US dollar, inflationary costs, and geo-politics.”

Emirates Group – Half year results 2023-24 highlights

Group

| September 2023 | September 2022 | Change

Revenue

AED 67.3bn
(US$ 18.3bn)

AED 56.3bn
(US$ 15.3bn)

20%

EBITDA

AED 20.6bn
(US$ 5.6bn)

AED 15.3bn
(US$ 4.2bn)

34%

Profit

AED 10.1bn
(US$ 2.7bn)

AED 4.2bn
(US$ 1.2bn)

138%

Profit margin | 15.0% | 7.4% | 7.6% pts

Cash assets*

AED 42.7bn
(US$ 11.6bn)

AED 42.5bn
(US$ 11.6bn)

0.4%

Employees at reporting date* | 108,996 | 102,379 | 6%

Emirates

| September 2023 | September 2022 | Change

Revenue

AED 59.5bn
(US$ 16.2bn)

AED 50.1bn
(US$ 13.7bn)

19%

EBITDA

AED 19.5bn
(US$ 5.3bn)

AED 14.7bn
(US$ 4.0bn)

33%

Profit

AED 9.4bn
(US$ 2.6bn)

AED 4.0bn
(US$ 1.1bn)

134%

Profit margin | 15.8% | 8.0% | 7.8% pts

Cash assets*

AED 38.2bn
(US$ 10.4bn)

AED 37.3bn
(US$ 10.2bn)

2%

Passengers carried (000’s) | 26,140 | 19,960 | 31%
Seat factor | 81.5% | 78.5% | 3% pts

Cargo carried
(000’ tonnes)

1,035

936

11%

Overall capacity | 28.5bn ATKMs | 22.8bn ATKMs | 25%
Available seat kms | 171.5bn ASKMs | 131.7bn ASKMs | 30%
Aircraft (number)* | 260 | 260 | –
Employees at reporting date* | 61,183 | 56,379 | 9%

dnata

| September 2023 | September 2022 | Change

Revenue

AED 9.3bn
(US$ 2.5bn)

AED 7.3bn
(US$ 2.0bn)

27%

EBITDA

AED 1.1bn
(US$ 305m)

AED 644m
(US$ 175m)

74%

Profit

AED 709m
(US$ 193m)

AED 236m
(US$ 64m)

200%

Profit margin | 7.6% | 3.2% | 4.4% pts

Cash assets*

AED 4.4bn
(US$ 1.2bn)

AED 5.1bn
(US$ 1.4bn)

-14%

Aircraft turns handled | 384,656 | 347,581 | 11%

Cargo handled
(000’ tonnes)

1,303

1,367

-5%

Meals uplifted | 66.3m | 50.5m | 31%

Travel services: Total Transaction Value (TTV)

AED 4.0bn
(US$ 1.1bn)

AED 3.5bn
(US$ 1.0bn)

15%

Employees at reporting date* | 47,813 | 46,000 | 4%