Emirates operated aircraft at Dubai International Airport in the United Arab Emirates.
Christopher Pikes | Bloomberg | Getty Images
Dubai’s Emirates Airline has trimmed its losses to $1.1 billion in the year to March, although rising fuel costs threaten to overshadow a recovery in travel demand.
The world’s largest long-haul airline said revenue rose 91% to $16.1 billion as travel lockdowns eased and the airline increased capacity. Emirates posted a loss of $5.5 billion last year.
“2021-22 has been largely about recovery after the toughest year in our group’s history,” said Sheikh Ahmed bin Saeed Al Maktoum, Emirates Group chairman and chief executive, in a statement on Friday.
“We expect the group to return to profitability in 2022-23 and are working hard to meet our targets while closely monitoring headwinds such as high fuel prices, inflation, new COVID-19 variants and political and economic uncertainty. “
The airline had resumed flights to 140 destinations by the end of March, but fuel price hikes – up more than 50% so far this year – continue to pose challenges for the pandemic-hit aviation sector. Emirates said its fuel bill more than doubled to $3.8 billion as oil and jet fuel prices have skyrocketed in recent quarters.
“It is very difficult to determine where this price will stop or how far it could go down,” Sheikh Ahmed said in an interview with CNBC on Tuesday when asked about the fuel price. “It’s having a really big impact on the airline business,” he added, saying geopolitics and the Russian invasion of Ukraine are having a significant impact on fuel prices.
Emirates said fuel accounted for 23% of operating costs over the year, compared to just 14% in 2020-21.
“The relatively recent reopening of major markets in Asia is key to Emirates’ recovery,” Alex Macheras, an independent aviation analyst, told CNBC. “Challenges will remain as China’s lockdowns continue, fleet concerns over Boeing 777 delays and a global cost of living crisis that will be more visible [in terms of impacts] to airlines this winter.”
way to the IPO
The Emirates Group, which owns Emirates and its airline services company Dnata, posted an annual loss of $1 billion even as Dnata returned to profitability. Group revenue increased 86% to $18.1 billion and the group ended the year with a 30% improvement in its cash position to $7 billion.
Sheikh Ahmed told CNBC the group now plans to repay the Dubai government some of the nearly $4 billion in emergency aid it pumped into the airline at the height of the pandemic.
“It was money well spent,” he said. “If things continue as they are now … we can repay what the government has pumped into the company.”
It comes amid renewed speculation that Emirates or its subsidiaries could be floated by the Dubai government, joining a list of companies already earmarked for IPO as part of a push by governments in the region to quash their state to take companies public.
“I am sure that maybe sometime in the future Emirates will be on the market and people will be able to buy the shares,” Sheikh Ahmed said. “I’m not making that point,” he added, without offering any further plans.
Dubai Airports, Emirates’ home base, attracted 13.6 million passengers in the first quarter, according to new data released on Thursday. Dubai Airports CEO Paul Griffiths told CNBC that passenger traffic in Dubai could return to pre-pandemic levels in 2024, a year earlier than previously expected, giving Emirates a tailwind from the recovery.