Cost cuts help Emirates increase profits by 282% in H1 FY2020

Despite Thomas Cook collapse impact on group finances, runway closure at Emirates main hub Dubai International Airport (DXB) and overall capacity fall by 7%, the UAE airline revealed growth during the first half of 2019-20 financial year. 

Overall Emirates group profits were up just slightly, by 8% in H1 FY2020, as it posted a net result of $320 million (AED 1.2 billion), while the airline unit increased its profits by 282% to $235 million (AED862 million).

Throughout the period, the Emirate airline was on a mission to cut costs, as evident by the fact that it reduced its overall capacity by 7%, retired six aircraft (scaling down the total fleet by three) and cut down its workforce by 1%. While revenues were down by 3% to $12.9 billion (AED47.3 billion), profit margin increased by 1.3% to 1.8% and load factor improved on Emirates aircraft by 2.3% to 81.1%.

dnata, an Emirates subsidiary that provides ground handling and catering services in airports, was impacted heavily by the bankruptcy of Thomas Cook. Back in October 2019, Tim Clark, the president of Emirates, already said that the impact of the British tour operator going down under would be “not a small amount”. Now, the scale of impact is more clear, as dnata’s profit for the first half of FY2019-20 is reported to be $85 million (AED311 million), down 64% compared to the same period last year.

However, Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive Officer of the airline and group highlighted that Emirates expects “the airline and travel industry to continue facing headwinds over the next six months”, in addition to the competition in the industry, which he called stiff and pointed out that they will add extra pressure on profit margins. The group remains “focused on developing our business” and is investing in new ventures that will allow Emirates to offer “even better products, services, and experiences for our customers”, Al Maktoum added.

Some of the new products will have to wait, though, as Clark said in September 2019, that the introduction of Premium Economy class on Emirates’ aircraft will be delayed due to the fact that engine issues are impeding the delivery schedule of the 777X. In another interview in October 2019, he noted that Emirates does not expect to receive a single 777X in 2020.

Boeing has since confirmed the fact that no 777X will be delivered in 2020, as the first delivery date is pushed back to early 2021.


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