Aircraft operated by Emirates at Dubai International Airport, United Arab Emirates.
Christopher Pike | Bloomberg | Getty Images
Dubai-based Emirates Airlines cut its losses to 1.1 billion in March, even as the rising cost of jet fuel threatened to surpass recovery demand for travel.
The world’s largest long-haul carrier says revenue jumped 91% to $ 16.1 billion as travel lockdowns eased and the airline added capacity. Emirates posted a $ 5.5 billion loss last year.
Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates Group, said in a statement on Friday that “2021-22, after the most difficult year in our group’s history, was about recovery.”
“We expect the group to return to profitability in 2022-23, and work hard to hit our targets by keeping a close eye on headwinds such as high fuel prices, inflation, new COVID-19 variants and political and economic uncertainty.”
The airline resumed flights to 140 destinations by the end of March, but rising fuel prices – more than 50% so far this year – continue to challenge the epidemic-ridden aviation sector. Emirates says its fuel bill has more than doubled to $ 3.8 billion in recent quarters due to rising oil and jet fuel prices.
“It’s very difficult to determine where this price will stop, or how low it will go down,” Sheikh Ahmed told CNBC in an interview on Tuesday when asked about fuel prices. “This is really affecting the airline business on a large scale,” he said, adding that geopolitics and Russia’s invasion of Ukraine were having a significant impact on fuel prices.
Emirates says it is responsible for 23% of fuel costs per year compared to just 14% in 2020-21.
“The relatively recent recovery of key markets in Asia is the key to the recovery of Emirates,” Alex Macheras, an independent aviation analyst, told CNBC. “As China’s lockdown continues, there will be challenges, with fleet concerns over the Boeing 777 delay and the global cost of living crisis that will become more visible. [in terms of impacts] To the airlines this winter. “
The path to IPO
The Emirates Group, which includes Emirates and its airline business Dnata, has recorded an annual loss of $ 1 billion, despite a return to Dnata profits. The group’s 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 that the group now plans to return to the Dubai government about $ 4 billion in emergency relief pumped to the airline at the height of the epidemic.
“It meant spending well,” he said. “If things continue as they are now … we can return what the government has injected into the company.”
There has been renewed speculation that the Dubai government may tap Emirates or its affiliates to reach out to the public, with governments in the region joining the business list already scheduled for initial public offerings as part of a push to take their state initiatives to the public.
“I am sure that at some point in the future, Emirates will come to the market and people will be able to buy shares,” said Sheikh Ahmed. “I don’t call that point,” he adds, and stops proposing any more plans.
Dubai Airport, home to Emirates, attracted 13.6 million passengers in the first quarter, according to new data released on Thursday. Paul Griffiths, CEO of Dubai Airport, told CNBC that air passenger traffic in Dubai could reach pre-epidemic levels in 2024, a year earlier than previously expected, providing a tailwind for Emirates through recovery.