Dubai’s Emirates airline on Friday, May 13 posted an annual loss of USD 1.1 billion, a sharp improvement on the USD 5.5 billion loss in 2021, as demand for international travel was boosted by governments easing pandemic-related curbs.
The airline, which only operates international services, reported a 91% jump in revenue to USD 16.1 billion for the year ended March 31 as passenger numbers tripled to 19.6 million.
“Business recovery picked up the pace, particularly in the second half of the year,” Chairman and Chief Executive Officer Sheikh Ahmed bin Saeed Al Maktoum said in a statement.
The state-owned airline said it filled 58.6% of seats flown, up from 44.3% a year earlier, while the number of destinations it served increased from 120 at the start of the financial year to more than 140 as of March 31.
It was the airline’s second consecutive annual loss and only the fourth in its almost 40-year operational history. Emirates has forecast a return to profitability this financial year, while Chairman Sheikh Ahmed said the Emirates Group, which includes the airline, would too.
The increased demand for air travel has boosted the airline’s finances, its revenues are up 91% to 16 billion as the airline expanded global capacity and reinstated more passenger flights. But rising fuel costs have snipped away at the profits.
“Fuel accounted for 23% of operating costs compared to 14% in 2020-21. The airline’s fuel bill more than doubled to AED 13.9 billion (USD 3.8 billion) compared to the previous year, driven by a higher uplift of 66% in line with capacity expansion and a higher average fuel price which was up by 75%,” it said.
“We expect the Group to return to profitability in 2022-23, and are working hard to hit our targets, while keeping a close watch on headwinds such as high fuel prices, inflation, new Covid-19 variants, and political and economic uncertainty.
This year, we focussed on restoring our operations quickly and safely wherever pandemic-related restrictions eased across our markets.”Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive Officer, Emirates
The airline’s total operating costs increased by 30% from the last financial year. Cost of ownership (depreciation and amortisation) and fuel cost were the two biggest cost components for the airline in 2021-22, followed by employee cost, it said.
Chief Operating Officer Adel Al Redha warned this week that while Emirates was managing high fuel prices and inflation, the current oil price was not sustainable for airlines. He said airfares would increase, though airlines would have to absorb some costs so as not to stifle the rebound in travel.
Emirates Group reported a USD 1 billion loss for the year, with revenue rising 86% to USD 18.1 billion. The Group’s global airport and travel services business dnata made a USD 30 million profit.
Sheikh Ahmed said this week he hoped the airline would after the current financial year be able to start paying back the 15 billion dirhams (USD 4.1 billion) it received from the Dubai government during the pandemic.
Gulf rival Qatar Airways, whose financial year also ended March 31, is yet to report its annual results.