Emirates Airline, stung by soaring fuel prices, posts $1.1 billion loss

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

Christopher Pike | Bloomberg | Getty Images

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

The world’s largest long-haul carrier said revenue jumped 91% to $16.1 billion as travel lockdowns eased and the airline increased capacity. Emirates recorded a loss of $5.5 billion the previous year.

“2021-22 has largely been about recovery, after the toughest year in our group’s history,” Emirates Group Chairman and CEO Sheikh Ahmed bin Saeed Al Maktoum said on Friday. in a press release.

“We expect the Group to return to profitability in 2022-23 and we are working hard to achieve our targets, while closely monitoring headwinds such as high fuel prices, inflation, new variants of the COVID-19 and political and economic uncertainty.”

The airline had resumed flights to 140 destinations by the end of March, but soaring fuel prices – up more than 50% so far this year – continue to challenge the pandemic-stricken aviation sector. Emirates said its fuel bill had more than doubled to $3.8 billion as the price of oil and jet fuel soared in recent quarters.

“It’s very difficult to determine where this price will stop or how far it might go down,” Sheikh Ahmed told CNBC in an interview on Tuesday when asked about fuel prices. “It’s really affecting the airline industry in a big way,” he added, saying geopolitics and Russia’s invasion of Ukraine had a significant impact on fuel prices.

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

“The relatively recent reopening of important markets in Asia is key to Emirates’ recovery,” Alex Macheras, an independent aviation analyst, told CNBC. “Challenges will persist with continued lockdowns in China, 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 business Dnata, posted an annual loss of $1 billion, despite Dnata returning to profitability. Group revenue rose 86% to $18.1 billion, and the group ended the year with a 30% improvement in its cash balance to $7 billion.

Sheikh Ahmed told CNBC the group now plans to repay the Dubai government part of the nearly $4 billion in emergency aid it injected into the airline at the height of the pandemic.

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

It comes amid renewed speculation that Emirates or its subsidiaries could be tapped by the Dubai government to go public, joining a list of companies already earmarked for an initial public offering as part of a push by governments in the region. to make their public enterprises public.

“I’m sure maybe in the future Emirates will be in the market and people can buy the shares,” Sheikh Ahmed said. “I’m not calling that point,” he added, pausing before offering other plans.

Dubai Airports, the home port of Emirates, attracted 13.6 million passengers in the first quarter, new data showed on Thursday. Dubai Airports CEO Paul Griffiths told CNBC that air passenger traffic in Dubai could reach pre-pandemic levels in 2024, a year ahead of schedule, providing a tailwind for Emirates during the recovery.

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