Dubai’s Emirates Airline narrowed 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 revenue jumped 91% to $16.1 billion dollars, as travel lockdowns eased and the airline added capacity. Emirates posted a $5.5 billion loss in the previous year.
“2021-22 was largely about recovery, after the toughest year in our Group’s history,” Emirates Group Chairman and Chief Executive 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 hit our targets, while keeping a close watch on headwinds such as high fuel prices, inflation, new COVID-19 variants, and political and economic uncertainty.”
The airline had resumed flights to 140 destinations by the end of March, but the surge in fuel prices — up more than 50% so far this year — continues to challenge the pandemic-battered aviation 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 establish where that price will stop, or how far it might go down,” Sheikh Ahmed told CNBC in an interview on Tuesday when asked about the price of fuel. “That’s really affecting the airline business in a big way,” he added, saying geopolitics and Russia’s invasion of Ukraine was having a significant impact on fuel prices.
Emirates said fuel accounted for 23% of operating costs over 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 remain with China’s lockdowns continuing, fleet concerns amid Boeing 777 delays, and a cost-of-living-crisis globally that will be more visible [in terms of impacts] to airlines this winter.”
Path to IPO
Emirates Group, which includes Emirates and its air service business Dnata, recorded an annual loss of $1 billion dollars, despite Dnata returning to profitability. Group revenue increased by 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 pay the Dubai government back some of the nearly-$4 billion in emergency relief that 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 pay back what the Government has injected into the company.”
It comes amid renewed speculation that Emirates or its subsidiaries could be tapped by the Dubai government to go public, joining a list of businesses already earmarked for initial public offering as part of a push among governments in the region to take their state enterprises public.
“I’m sure that maybe sometime in the future that Emirates will be on the market and people will be able to buy the shares,” Sheikh Ahmed said. “I don’t call that point,” he added, stopping short of offering any further plans.
Dubai Airports, the Emirates home base, attracted 13.6 million passengers in the first quarter, according to new data released on Thursday. Dubai Airports CEO Paul Griffiths told CNBC that air passenger traffic in Dubai may reach pre-pandemic levels in 2024, a year earlier than previously expected, providing a tailwind for Emirates through the recovery.