May 10, 2020: Emirates Group posted its 32nd consecutive year of profit, against a drop in revenue mainly attributed to reduced operations during the planned DXB runway closure in the first quarter, and the impact of flight and travel restrictions due to the Covid-19 pandemic in the fourth quarter. The total passenger and cargo capacity declined by 8 percent to 58.6 billion available tonne-kilometres (ATKMs).
The 2019-20 Annual Report showed a profit of AED 1.7 billion ($456 million) for the financial year ended 31 March 2020, down 28 percent from last year. The group’s revenue reached AED 104 billion ($28.3 billion), a decline of 5 percent over last year’s results. The cash balance was AED 25.6 billion ($7 billion), up 15 percent from last year mainly due to a strong business performance up to February 2020 and lower fuel cost compared to previous year.
With the lingering weakness in air freight demand over most of the year, Emirates SkyCargo reported a revenue of AED 11.2 billion ($3.1 billion), a decrease of 14 percent over last year. Freight yield per freight tonne kilometres (FTKM), after two consecutive years of growth, declined by 2 percent, largely impacted by the reduction in fuel price, and a strong US dollar.
Tonnage carried decreased by 10 percent to reach 2.4 million tonnes, due to the capacity reduction with the retirement of one B777 freighter and reduced available bellyhold capacity in the first and last quarters of the year. At the end of 2019-20, Emirates’ SkyCargo’s total freighter fleet stood at 11 B777Fs.
In October, it launched Emirates Delivers, an e-commerce platform that helps individual customers and small businesses consolidate online purchases in the US and have them delivered in the UAE. More origin and destination markets are being planned in the future, leveraging Dubai as a hub for regional e-commerce fulfilment. During the year, Emirates Skycargo also strengthened its pharma capabilities with the opening of new facilities in Chicago and Copenhagen.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates Airline and Group, said, “For the first 11 months of 2019-20, Emirates and dnata were performing strongly, and we were on track to deliver against our business targets. However, from mid-February things changed rapidly as the Covid-19 pandemic swept across the world, causing a sudden and tremendous drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions.”
The group collectively invested AED 11.7 billion ($3.2 billion) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and employee initiatives, a decrease following last year’s record investment spend of AED 14.6 billion ($3.9 billion).
At the 2019 Dubai Air Show in November, Emirates placed a $16 billion order for 50 A350 XWBs, and $8.8 billion order for 30 B787 Dreamliner aircraft. With first deliveries expected in 2023, these new aircraft will add to Emirates’ current fleet mix, and provide deployment flexibility within its long-haul hub model. In line with Emirates’ long-standing strategy to operate a modern and efficient fleet, these new aircraft will also keep its fleet age well below the industry average.
dnata’s key investments during the year included: the significant expansion of catering capabilities in North America with the opening of new operations in Vancouver, Houston, Boston, Los Angeles and San Francisco. dnata also completed the purchase of the remaining stake in Alpha LSG, to become the sole shareholder of the UK’s biggest inflight catering, onboard retail and logistics company.
He concluded, “The Covid-19 pandemic will have a huge impact on our 2020-21 performance, with Emirates’ passenger operations temporarily suspended since March 25, and dnata’s businesses similarly affected by the drying up of flight traffic and travel demand all around the world. We continue to take aggressive cost management measures, and other necessary steps to safeguard our business, while planning for business resumption. We expect it will take 18 months at least before travel demand returns to a semblance of normality. In the meantime, we are actively engaging with regulators and relevant stakeholders, as they work to define standards to ensure the health and safety of travellers and operators in a post-pandemic world.”
Emirates received six new aircraft during the financial year, all A380s. During 2019-20, Emirates phased out six older aircraft comprising of four B777-300ERs, its last 777-300 and one B777 freighter leaving its total fleet count unchanged at 270 at the end of March.
During the year, Emirates launched three new passenger routes: Porto (Portugal), Mexico City (Mexico) and Bangkok-Phnom Penh. It also supplemented its organic network growth with a new codeshare agreement signed with Spicejet that will provide Emirates customers with more connectivity options in India.
Additionally, Emirates expanded its global connectivity and customer proposition through interline agreements with Vueling, adding connections to over 100 destinations around Europe via Barcelona, Madrid, Rome and Milan; with Turkish low-cost airline Pegasus Airline (PC), offering customers connections onto selected routes on PC’s network; and with Interjet Airlines, opening new routes for passengers travelling between Mexico, the Gulf and the Middle East and beyond.
Total operating costs decreased by 10 percent over the 2018-19 financial year. The average price of jet fuel declined by 9 percent during the financial year after last year’s 22 percent increase. Including a 6 percent lower uplift in line with capacity reduction, the airline’s fuel bill declined substantially by 15% over last year to AED 26.3 billion ($7.2 billion) and accounted for 31 percent of operating costs, compared to 32 percent in 2018-19. Fuel remained the biggest cost component for the airline.
During the year, Emirates raised a total of AED 9.3 billion ($2.5 billion) in aircraft financing, funded through term loans. Emirates secured Bpifrance (French Sovereign Export Credit Agency) Assurance Export backed financing that also combined a commercial loan tranche sourced from Korean investors for all six aircraft delivered in 2019-20.
Europe was the highest revenue contributing region with AED 26.1 billion ($7.1 billion), down 8 percent from 2018-19. East Asia and Australasia follows closely with AED 24.1 billion ($6.6 billion), down 9 percent. The Americas region recorded revenue growth at AED 14.6 billion ($4.0 billion), up 1 percent. West Asia and Indian Ocean revenue increased by 4 percent to AED 9.8 billion ($2.7 billion). Africa revenue decreased by 4 percent to AED 8.7 billion ($2.4 billion), whereas Gulf and Middle East revenue decreased by 8 percent to AED 7.7 billion ($2.1 billion).
For 2019-20, dnata recorded a sharp profit decline (57 percent) to AED 618 million ($168 million). This includes a one-time gain from a transaction where dnata divested its minority stake in Accelya, an IT company that was acquired by Vista Equity Partners.
dnata’s cargo handling declined by 4 percent to 698,000 tonnes, impacted by lower demand in the overall air cargo market during the year, and the 45-day DXB runway closure in Q1.
During 2019-20, dnata also inaugurated new cargo capabilities with a second warehouse in Brussels dedicated to handling imports, and a new bespoke export facility at London Heathrow, dnata City East, which is equipped with industry-leading technology and significantly increases the cargo capacity at the UK’s busiest airport.