Half-year financial results
Financial numbers always tell a story and foretell a trend. This is certainly true in our case. The story of our half-yearly results revolves around the weak global economy, strong currencies, a cutthroat competitive landscape, pressure on demand and changing consumer behaviour. And through it all are woven the themes of global uncertainty and conflict.
All these factors have had a huge and drastic impact across our half-yearly financials – April to September 2016 – mainly on the airline and travel side of our business.
Compared to 2015, the Emirates Group’s half-year revenue increased by 1%, but Emirates’ revenue is down by 1%. dnata’s revenue is up by 14%. Group profits decreased by 64% - Emirates’ profits were down by 75% and dnata’s by 1%. Profit margins fell by 5.1 percentage points for the Group, 5.5 for Emirates and 1.5 for dnata.
These figures are all the more heart-breaking as the Group enjoyed the best-ever half-year profit in 2015.
The Group’s cash position on 30 September 2016 was 36% lower: 40% down on the airline front and 13% on dnata’s. This is due to ongoing investments mainly in new aircraft, airline related projects, dnata’s business acquisitions, and repayment of bonds and loans.
On a somewhat brighter note, Emirates carried 2.3 million more passengers – up by 9% to match our overall capacity growth. This must be tempered by the fact that our seat loads dropped by three percentage points to 75.3%. We recruited 7% more people to help run the larger scale of our airline operations and added 13% more in dnata, mainly as a result of acquisitions. Despite the challenging economy, Emirates SkyCargo was able to maintain volumes carried at 1.3 million tonnes.
dnata’s results were more upbeat with revenues across airport operations up by 31% and catering by 3%. We handled 75% more aircraft and 28% more cargo, mainly due to our growth and acquisitions in Brazil and the U.S. Travel revenues reflected global trends, and were down by 13%. Our global presence now spans 83 countries, with the international operations accounting for over 67% of total revenue.
What is our action plan?
This is the first time since 2008-09 that our fundamental financial figures have been so weak. But it’s hardly shocking as we review our business health and travel trends in real-time. I assure you we aren’t waiting for things to sort themselves out.
Cross-departmental teams of experts and specialists have come together to analyse issues, data and business intelligence. We’re looking at our business model and at new ways to boost sales and revenue network-wide. We will gain market share, not through price wars, but by winning customers over with our superior product and services. The customer experience stream is breaking down internal silos to create seamless journeys.
We’re closely monitoring costs – everything from recruitment to new projects, facilities and marketing – without compromising customer experience. We’ve already set sail on our business transformation, which will be supported by data, technology and the right organisational design. We’re rebuilding ourselves into a more efficient business, and we’ve recruited a team, headed by Christoph Mueller, to lead this transformation.
We’ve built a great foundation for sustainable growth.
We’ve invested in the fleet of the future with an all Airbus A380 and Boeing 777 line-up. We’ve created a robust network of destinations spanning the globe. We’re the largest international airline. We’re the most valuable airline brand and continue to win accolades for our ever-evolving products and service. At dnata, we’ve put safety and our customers at the heart of our business, and acquisitions at the heart of our growth strategy.
We’re on the right track, but have a long way to go as we continue to evolve and adapt to constant change. All our decisions and actions are focussed on our future, on our committed investments, on connecting the world through Dubai and giving our customers the best experience on the ground and in the air.
What does this mean for you?
I’ve said this before: you are our biggest competitive advantage. Each one of us, whatever our role, is an ambassador for our business. How well you represent us in our internal and external world will drive our success. Our focus continues to be on giving you the right environment, equipment, tools and resources to be successful at your jobs. Your leaders are here to guide and inspire you, be accountable both for our success and failures, and to take key decisions. But they cannot do it alone – they need your support to make it work.
This year, our focus must also be on costs. Save every dirham you can, and spend a dirham only if you’re assured of greater returns. You’re the expert and know our business inside out – use your bright ideas to cut costs, but never the customer experience.
We’ve taken many storms in our stride – from recessions and conflicts to epidemics and natural disasters. Together, we’ve emerged stronger, bigger and better.
Team spirit, commitment, endurance and being brave to take calculated risks will define our response to the half-yearly financial results. I’ve full confidence we will overcome.
Ahmed bin Saeed Al Maktoum
Chairman & Chief Executive Emirates Airline & Group