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Emirates Group records US$3 billion net profits

May 11, 2023

Gulf Business Times Report

Emirates Group, which owns Emirates Airline and Dubai National Air Travel Agency (DNATA), reported US$3 billion (Dh10.9 billion) net profits for the financial year ended 31 March 2023, compared with a US$1 billion (Dh3.8 billion) loss for last year ending March 2022.

The Group’s revenue jumped 81 percent to US$32.6 billion (Dh119.8 billion), due to higher passenger traffic, strong yield and lower operating cost.

The Group’s cash balance was US$11.6 billion (Dh42.5 billion), the highest ever reported, up 65 percent from last year mainly due to strong demand across its core business divisions and markets.  

Emirates Airline’s total revenue for the financial year increased 81 percent to US$29.3 billion (Dh107.4 billion). With the removal of pandemic-related travel restrictions globally, the airline substantially improved its financial results and reported a record profit of Dh10.6 billion (US$2.9 billion) after last year’s Dh3.9 billion (US$1.1 billion) loss, and an exceptional profit margin of 9.9 percent, reflecting the best performance in the airline’s history.

The airline carried 43.6 million passengers, an increase of 123 percent in 2022-23, with seat capacity up by 78 percent. The airline reported a Passenger Seat Factor of 79.5 percent, compared with last year’s passenger seat factor of 58.6 percent; and a 7 percent increase in passenger yield to 37.5 fils (10.2 US cents) per Revenue Passenger Kilometre (RPKM), due to a change in cabin and route mix, fares and currency.  

Currency fluctuations in some of the airline’s major markets, notably the Euro, Pound Sterling, and devaluation of the Pakistani Rupee, significantly impacted the airline’s profitability negatively by Dh4.5 billion (US$1.2 billion).

Total operating costs increased by 57 percent from last financial year. Cost of ownership (depreciation and amortisation) and fuel cost were the two biggest cost components for the airline in 2022-23, followed by employee cost. Fuel accounted for 36 percent of operating costs compared to 23 percent in 2021-22. The airline’s fuel bill increased by 143 percent to Dh33.7 billion (US$9.2 billion) compared to the previous year, due to a higher uplift of 49 percent in line with capacity expansion and a higher average fuel price which was up by 48 percent.

Emirates’ total passenger and cargo capacity increased by 32 percent to 48.2 billion ATKMs in 2022-23, as the airline continued to reinstate passenger services across its network in line with the lifting of pandemic-related flight and travel restrictions. 

In addition to launching services to Tel Aviv, Emirates relaunched flights to six destinations and increased operations to 62 cities across its network throughout the year to serve strong customer demand. By 31 March 2023, the Emirates network comprised 150 destinations across six continents, including 9 cities served by its freighter fleet only. 

Emirates also deployed its flagship A380 aircraft to even more cities during the year, bringing its A380 network to 43 destinations as of 31 March 2023.

Enabling its customers access even more destinations, Emirates signed agreements with new codeshare partners in 2022-23 most notably with United Airlines and Air Canada, expanding the airline’s connectivity in the Americas to over 200 new points, in addition to mutual frequent flyer programme benefits. Emirates also reinforced its strategic partnerships with Qantas and flydubai and added new interline and codeshare partners: Airlink, AEGEAN, ITA Airways, Air Tanzania, Bamboo Airways, Batik Air, Philippine Airlines, Royal Air Maroc and Sky Express.

Emirates received two new 777 freighter aircraft during the financial year. It also phased out 4 older aircraft comprising of 2 A380, 1 Boeing 777-300ERs and 1 Freighter. Its total fleet count at the end of March was 260 units, with a youthful average fleet age of 9.1 years. 

Emirates’ order book stands at 200 aircraft, including 5 additional Boeing 777-300ER freighter orders announced during 2022-23. The airline’s long-standing strategy of operating modern and efficient aircraft remains unchanged, a commitment which underpins its Fly Better brand promise as a young fleet is better for the environment, better for operations, and better for customers.

.Emirates continued to invest in delivering ever better customer experiences. During the year, it launched its full Premium Economy experience to hugely positive customer feedback, brought into service the first 6 of its newly retrofitted A380s with completely refreshed cabin interiors, and opened ‘Emirates World’ – a modern concept retail store which will gradually be introduced to other key markets. It also announced a US$350 million investment in new generation inflight entertainment systems for its A350 fleet.

Emirates SkyCargo delivered a solid performance, contributing 16 percent of the airline’s revenue despite a reduction in available capacity as aircraft that were temporarily converted into “mini freighters” during the pandemic returned to full passenger service.

With steady air freight demand throughout the year, Emirates’ cargo division reported a solid revenue of Dh17.2 billion (US$4.7 billion). This was a 21 percent decline over last year’s exceptional performance caused by the pandemic.

Emirates’ hotels portfolio revenue over last year increased by 12 percent to Dh675 million (US$184 million) reflecting the uptick in tourism traffic, particularly to Dubai.   

Emirates has consistently demonstrated the ability and commitment to fulfil its contractual obligations. In addition to repaying aircraft related financing liabilities as they fall due, it successfully repaid Dh3.0 billion (US$817 million) more of the total Dh17.5 billion (US$4.8 billion) raised during the COVID-19 crisis. This assurance continues to strengthen the confidence of its financing partners in its business model and allowed Emirates to reprice Dh4.5 billion (US$1.2 billion) of debt during this financial year and further raise Dh1.2 billion to finance the acquisition of two new B777 freighter aircraft through an Islamic finance lease at highly effective margins.

Emirates closed the financial year with an exceptional level of cash assets of Dh37.4 billion (US$10.2 billion), 79 percent higher compared to 31 March 2022.   

Emirates’ ground handling and airline ticketing arm, Dubai National Air Travel Agency (dnata) increased its profit by 201 percent to Dh331 million (US$90 million) on a 74 percent jump in revenue to Dh 14.9 billion (US$4.1 billion). dnata’s international businesses account for 72 percent of its revenue, an increase of 10 percent from the previous year.

In 2022-23, Dnata’s operating costs increased by 74 percent to Dh14.6 billion (US$4.0 billion), in line with expanded operations in its Airport Operations, Catering and Travel divisions and impacted by inflationary pressure across all markets mainly for labour and food supply.

Dnata’s cash balance improved by more than Dh200 million to Dh5.1 billion (US$1.4 billion). Net cash used in financing activities, primarily payments for loans and leases, amounted to Dh906 million (US$247 million), while the business utilised net cash of Dh528 million (US$144 million) in essential investing activities. The business saw a positive operating cash flow of Dh1.4 billion (US$381 million) in 2022-23, a reflection of the substantial improvements in revenue.

Revenue from dnata’s Airport Operations, including ground and cargo handling increased to Dh7.2 billion (US$2.0 billion).

The number of aircraft turns handled by dnata globally grew by 35 percent to 712,383, cargo handled declined by 8 percent to 2.7 million tonnes, reflecting the increased flight activity across markets as the last pandemic restrictions lifted and dnata’s customers reinstated services.

During 2022-23, dnata launched its ground handling operations at the newly built terminal of Zanzibar Abeid Amani Karume International Airport, together with Emirates Leisure Retail (ELR) and MMI as master concessionaire for all food and beverage, duty free and commercial outlets at the terminal. It also expanded operations in Canada, partnering GTA Group to offer quality and safe cargo services in Calgary and Vancouver.

dnata’s Catering & Retail business accounted for Dh4.8 billion (US$1.3 billion) of dnata’s revenue, up by 187 percent. The inflight catering business uplifted 111.4 million meals to airline customers, almost three times the number of meals from last year, as its airline customers across the world restored their flight operations.

Revenue from dnata’s Travel Services division grew by 227 percent to Dh2.3 billion (US$ 618 million). The reported total transaction value (TTV) of travel services sold increased by 203 percent to Dh7.0 billion (US$1.9 billion), a substantial growth from last year. This reflects last year’s abnormal situation where the business was recovering from COVID-19-related booking cancellations.