Emirates posts record $762 million profits

The Emirates Group yesterday announced a record profit of $762 million - up five per cent on last year - as the company continues to expand at a rapid pace.

Speaking at a press conference in Dubai, group chairman and chief executive Sheikh Ahmed bin Saeed Al-Maktoum (picture) said this was Emirates' 18th consecutive profit. The airline made a profit of $674 million (from $656 million) while the company's cargo arm, Dnata, made $88 million - an increase of 24.6 per cent.

Emirates is already the second most profitable airline in the world but Sheikh Ahmed said it was aiming to increase the 2005/6 profit figure by 13 per cent by the same time next year. He seemed rather unconcerned about rising oil prices and global instability, saying the company always had a positive outlook and believed the current problems - like the ones that came before them in the Middle East - were short term.

Sheikh Ahmed put Emirates Airline's success down to efficiency, profitability and the geographical position of its base. "I have to admit that one of the reasons for our success is our fortunate location. Dubai was called the national city of gold. Now it is the city of the future."

Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum has set a target of receiving 15 million visitors per year by 2012 and the only way to realise this, Sheikh Ahmed explained, is to expand the airline and build more hotels. Emirates already carried 14 million passengers and expanded capacity by 19 per cent in the past year. It also had a 91-strong fleet by the end of March with an average age of 61 months and will be taking delivery of one aircraft per month for the next six years, which include 45 of Airbus's huge double-decker A380s, the first of which will be delivered in April next year, as well as 42 Boeing 777s. That will make up a fleet of 161 by 2010.

The private sector is also responding to Dubai's unrelenting expansion. A number of gigantic and highly ambitious developments are already underway, particularly in the beach area, with several others in the pipeline. Yet, Sheikh Ahmed's message to developers was clear: "It is not possible to get a room in Dubai at the moment and room rates have increased. I would always encourage more hotels in Dubai".

Emirates' profit announcement was achieved in spite of jet fuel prices reaching record levels. Sheikh Ahmed vehemently denied that the airline receives any help from its owner, the Dubai government.

"It has been said that we receive free or discounted jet fuel. How I wish we did! We pay the same price as any other carrier," he said, explaining that Emirates' fuel bills had shot up from 13 per cent to 27 per cent of its total costs over the past five years.

And, yet, he said, the fuel surcharge imposed by Emirates only covered 41 per cent of the increased fuel cost in the past year. "We paid some $528 million more than we had budgeted for, such was the volatility of the world's oil markets."

He said that profitability - as well as productivity which increased by 18 per cent - was the key to achieving this. "Emirates receives no subsidies, no free petrol, no cheap airport fees. The key reason for our success is that we are efficient."

He also played down accusations that Emirates seeks to be a threat to any other airline. "We have simply concentrated on trying to provide a superb service for our passengers and cargo customers."

Sheikh Ahmed added that the group intended to reinvest the retained profits - the Dubai government received a dividend of $105 million - in acquiring advanced equipment and facilities as well as hiring and training the best people.

The first runway of Dubai's new Jebel Ali Airport is expected to be completed next year, with annual passenger capacity expected to hit the 75 million mark by 2015 at the latest. And Emirates is also building a new headquarters that will be ready next year, together with a cabin crew training college and a twin-tower, 70-storey deluxe hotel.

The airline has come a long way since its humble beginnings in 1985 when it flew with just two leased aircraft. Today it flies to 83 destinations - including a four-weekly service to Malta - in 57 countries. The long term plan, the Sheikh said yesterday, was "more of the same". And he added: "Our vision is to fly to every point in the world - no limits."