High fuel prices hit Emirates profits

Airline Emirates today blamed record fuel prices for a sharp fall in profits.

Net profits for the period between April and September slumped 88% to $77m (€59.6m), which Emirates chairman and chief executive Sheikh Ahmed bin Saeed Al-Maktoum said reflected a “very tough” period for the industry as a whole.

He said the airline faced a 40% increase in costs, with fuel spend more than doubling from last year’s $1.1bn (€850m) to $2.5bn (€1.93bn).

Crude oil prices averaged $122 (€94) per barrel for the first six months of the financial year, up from an average of $67 (€52) for the same period last year.

Overall, Emirates’ fuel costs were higher than budgeted by $469m (€363m).

Sheikh Ahmed said: “The first half of the year has been very tough for the airline industry, with record fuel prices forcing many carriers to shut shop or consolidate.

“Emirates has worked hard to manage the impact of high fuel prices on our unit costs, while continuing to grow our business and provide our customers with a quality product and service.”

He said the airline had invested in more efficient aircraft fleet and in a new airport terminal in Dubai dedicated to Emirates operations.

Emirates runs 98 flights a week in and out of the UK.

Sheikh Ahmed said the company had strengthened its global route network and infrastructure.

“Recent events show that only the most efficient businesses will survive and prosper, and these investments put us in a strong position to weather the current crunch and future challenges,” he said.

Last week British Airways reported a 90% slide in half-year pre-tax profits and announced it was already axing services from its summer 2009 schedule.

Ryanair boss Michael O’Leary has predicted a grim future for the industry, saying he only expects four European carriers to survive – BA, Air France, Lufthansa and Ryanair.

Despite the drop in profits, Emirates said it had a positive outlook for the next six months.

Operating revenues were up 31% to $6bn (€4.64bn) and passenger traffic jumped 11%.

Since April, Emirates has launched passenger services to three new destinations - Kozhikode (Calicut) in India, Guangzhou in China and Los Angeles, US.

It now has a global network of 100 cities on six continents.

The airline also plans to launch non-stop flights from Dubai to San Francisco on December 15.

Since the beginning of current financial year, Emirates received delivery of eight new wide body aircraft including two Airbus A380 superjumbo jets.