Emirates posts a drop in profits to a seven-year low as high fuel costs and competition hit margins.
Emirates’ latest profit figures have dropped 69% to AED 871 million (€210 million), which the carrier blamed on high fuel prices, “cut-throat” competition and unfavourable exchange rates.
Owner of the world’s biggest long-haul airline, Emirates Group overall suffered a 44% decline in 2018-19 annual earnings.
Net income in the year to the end of March shrank to AED 2.32 billion, the lowest since 2012. Employees will not get a bonus this year, as this figure missed an internal target.
All airline earnings are affected by the price of oil, but Emirates is particularly sensitive to fluctuations, Bloomberg reports.
The company revealed last week that its oil price sweet spot is between $50 and $60 a barrel, compared with the current level of about $70.
“Our performance was not as strong as we would have liked,” Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum admits. “Higher oil prices and the strengthened US dollar eroded our earnings, even as competition intensified in our key markets.”
Emirates is in a state of transition, nearing the completion of a review of its future network aimed at focusing on more profitable routes and coping with the eventual exit of the A380 from its fleet.
The airline will bring in a new premium economy class across the fleet next year to help broaden its attractiveness.