Overcapacity and low travel demand in many markets are being attributed to the drop in air fares, which have contributed to a slump in earnings, alongside currency losses and higher costs from jet fuel and aircraft operating leases.
Revenue and other income for Emirates Group, which includes the airline and ground handling division dnata, rose by 1.9% to Dh94.7bn for the year 2016 to 2017, compared with Dh92.9bn in the same period the previous year. However, profit attributable to the owner reportedly dropped to Dh2.5bn, down from Dh8.2bn the year before, and profit at the airline fell by 82.5% year-on-year to Dh1.25bn, even as it reported flat revenue at Dh85bn. As a result, the carrier’s profit margin fall to 1.5% for the period, in contrast with an 8.4% margin a year earlier.
At the end of March, the airline was sitting on cash of Dh15.7bn, down by 21.6% from the end of the previous financial year.
"Aviation and travel are notoriously vulnerable to social, economic and political events, as well as the ever-changing expectations of consumers," commented Sheikh Ahmed bin Saeed, Chairman and CEO of Emirates Airline and Group, in its annual report. "For us, this year has been a particularly testing one."
Counting 56m passengers, Emirates saw and increase of 8% in passenger traffic for 2016, compared to the year before, with an average seat load factor of 75.1%, down from 76.5%. The airline carried 2.6m tonnes of air freight – an increase of 2.7%. In its annual report, Emirates said that it closed the year with average passenger yields down by 7.2% compared to the previous year, amid strong downward pressure on air fares.
As well as low air fares, Sheikh Ahmed implicated the global effect of Brexit on travel demand and business confidence, adding that demand in its biggest market, Europe, had been negatively affected by uncertainty surrounding immigration, terrorism and the political upheaval in Turkey. US government actions this year on visa issuances and security restrictions on electronic devices on flights from the UAE, have also presented significant challenges, he went on to say.
