Emirates Airline, Stung by Rising Fuel Prices, Loses $1.1 Billion

Aircraft operated by Emirates, at Dubai International Airport in the United Arab Emirates.

Christopher Pike | Bloomberg | Getty Images

Dubai’s Emirates Airline cut its losses to $1.1 billion in the year to March, even as soaring jet fuel costs threaten to overshadow a recovery in travel demand.

The world’s largest long-haul carrier said sales rose 91% to $16.1 billion dollars as travel lockdowns were eased and the airline added capacity. Emirates posted a loss of $5.5 billion last year.

“2021-22 has been largely dominated by recovery, after the most difficult year in our group’s history,” Emirates Group chairman and managing director Sheikh Ahmed bin Saeed Al Maktoum said 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 at the end of March, but the rise in fuel prices – by more than 50% so far this year – continues to challenge the pandemic-ravaged airline sector. Emirates said its fuel bill more than doubled to $3.8 billion dollars as the price of oil and jet fuel soared in recent quarters.

“It’s very difficult to determine where that price will stop, or how far it will fall,” Sheikh Ahmed told CNBC on Tuesday when asked about the price of fuel. “That has major implications for the airline industry,” he added, saying geopolitics and the Russian invasion of Ukraine had a significant impact on fuel prices.

Emirates said fuel accounted for 23% of operating costs during the year, compared to just 14% in 2020-21.

“The relatively recent reopening of key 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 amid Boeing 777 delays and a global cost of living crisis that will be more visible [in terms of impacts] to airlines this winter.”

Path to IPO

Emirates Group, which includes Emirates and its air services company Dnata, posted an annual loss of $1 billion, despite Dnata returning to profitability. Group sales increased 86% to $18.1 billion, and the group ended the year with a 30% improvement in its cash balance to $7 billion dollars.

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.

“That was money well spent,” he said. “If things continue as they are now… we can repay what the government has injected into the company.”

It comes amid renewed speculation that Emirates or its subsidiaries could be wiretapped by the Dubai government to go public, joining a list of companies already slated for IPO as part of a push among governments in the region to make their state-owned companies public.

“I’m sure Emirates might come out in the future and people will be able to buy the shares,” Sheikh Ahmed said. “I’m not calling that,” he added, but stopped offering any further plans.

Dubai Airports, the home of Emirates, attracted 13.6 million passengers in the first quarter, according to new data released Thursday. Paul Griffiths, CEO of Dubai Airports, told CNBC that air passenger traffic in Dubai could reach pre-pandemic levels by 2024, a year earlier than previously expected, a year earlier than previously expected, giving Emirates the wind in its recovery. gets sailing.

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