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The Emirates Group today announced its 28th consecutive year of profit and steady business expansion, ending the year with record profits, and in a strong position despite the global and operational challenges during this period.

During the 2015-16 financial year, both Emirates and dnata achieved new capacity and profit milestones, as the Group continued to expand its global footprint, and strengthen its business through strategic investments.

Released today in its 2015-16 Annual Report, the Emirates Group posted a Dh8.2 billion ($2.2bn) profit for the financial year ending March 31, 2016, up 50 per cent from last year.

The group’s revenue reached Dh93bn ($25.3bn), a decrease of 3 per cent over last year’s results, and the Group’s cash balance increased strongly to Dh23.5bn ($6.4bn).

“Emirates and dnata delivered record profits, solid business results, and continued to grow throughout 2015-16,” said Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.

“Against an unfavourable currency situation which eroded our revenues and profits, an uncertain global economic environment dogged by weak consumer and investor sentiment, as well as ongoing socio-political instability in many regions around the world, the Group’s performance is testament to the success of our business model and strategies,” he said.

“Our ongoing investments to develop our people and to our enhance business performance, enable us to react with agility to the new challenges and opportunities that every year brings. In 2015-16, the Group collectively invested over Dh17.3bn ($4.7bn) in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and staff initiatives. These will build on our strong foundations, extend our competitive edge, and accelerate our progress towards our long-term goals.”

The Group’s employee base across its more than 80 subsidiaries and companies increased by 13 per cent to over 95,000-strong representing over 160 different nationalities.

“Looking at the year ahead, we expect that the low oil prices will continue to be a double-edged sword – a boon for our operating costs, but a bane for global business and consumer confidence. The strong US dollar against major currencies will remain a challenge, as will the looming threat of protectionism in some countries,” he said.

“However, we enter the new financial year with confidence, backed by a robust balance sheet, solid track record, diverse global portfolio, and international talent pool. We will continue to evolve and grow our business profitably, and work even harder to meet and exceed our customers’ expectations,” said Sheikh Ahmed.

In line with the overall profit, the Group declared a dividend of Dh2.5bn ($681 million) to the Investment Corporation of Dubai.

Emirates performance

Emirates’ total passenger and cargo capacity crossed the 56bn mark, to 56.4bn Available Tonne Kilometres (ATKMs) at the end of 2015-16, cementing its position as the world’s largest international airline. The airline increased capacity during the year by 5.5bn ATKMs, or 11 per cent over 2014-15.

Emirates received 29 new aircraft, its highest number during a financial year, including 16 A380s, 12 Boeing 777-300ERs and one Boeing 777F, bringing its total fleet count to 251 at the end of March.

At the same time, nine aircraft were phased out, taking the average fleet age down to 74 months or approximately half the industry average of 140 months.

The airline remains the world’s largest operator of the Boeing 777 and A380 – both aircraft being amongst the most modern and efficient wide-bodied jets in the sky today.

With the delivery of new aircraft, Emirates launched eight new passenger destinations: Bali, Bologna, Cebu, Clark, Istanbul (Sabiha Gökçen), Mashhad, Multan, Orlando; and two new additional freighter destinations: Columbus and Ciudad del Este. It also added services and capacity to 34 cities on its existing route network across Africa, Asia, Europe, the Middle East, and North America, offering customers even greater choice and connectivity.

With significant currency devaluations against the US dollar and fare adjustments following the reduction in fuel prices, Emirates revenue dropped 4 per cent to Dh85bn ($23.2bn).

The relentless rise of the US dollar against currencies in most of Emirates’ key markets had a Dh6bn ($1.6bn) impact on airline revenue, and a Dh4.2bn ($1.1bn) impact to the airline’s bottom line.

However, total operating costs decreased by 8 per cent over the 2014-15 financial year. The average price of jet fuel fell during the financial year, supporting Emirates’ bottom line improvement. The airline’s fuel bill decreased by 31 per cent over last year to Dh19.7bn ($5.4bn). Fuel is now 26 per cent of operating costs, compared to 35 per cent in 2014-15, but it remained the biggest cost component for the airline.

The airline successfully managed increased competitive pressure across all markets to record a profit of Dh7.1bn ($1.9bn), an increase of 56 per cent over last year’s results, and a healthy profit margin of 8.4 per cent, the strongest margin since 2010-11.

Carrying a record 51.9 million passengers (up 8 per cent), Emirates crossed the 50 million passenger milestone, and achieved a Passenger Seat Factor of 76.5 per cent. The decline in passenger seat factor compared to last year’s 79.6 per cent, is relative to the strong 13 per cent increase in seat capacity by Available Seat Kilometres (ASKMs), and also in part due to lingering economic uncertainty and strong competition in many markets.

Overall passenger traffic growth continues to demonstrate the consumer desire to fly on Emirates’ state-of-the-art aircraft, and via efficient routings through its Dubai hub. Premium and overall seat factor for Emirates’ flagship A380 aircraft outperformed the network, underscoring the popularity of Emirates’ premium and A380 product amongst passengers. At March 31, 2016, Emirates had 75 A380 aircraft in its fleet, serving one out of every four destinations on its passenger network.

Under pressure from the weakening of all major currencies against the USD, passenger yield dropped to 26.7 fils (7.3 US cents) per Revenue Passenger Kilometre (RPKM).

To fund its fleet growth, Emirates raised a record of Dh26.9bn ($7.3bn), using a variety of financing structures.

Financing highlights include Emirates entering into a unique hybrid operating lease structure put together by combining German banks and institutional investors with Islamic debt in Murahaba format to fund an A380 aircraft.

In Asia, Emirates continued to tap on the Japanese market for the Japanese Operating Lease (JOL) structure, and Japanese Operating Lease with a Call Option (JOLCO) on A380 and Boeing 777-300ER aircraft delivered during the year. Emirates also closed the first ever operating lease on an A380 financed entirely by the Korean institutional market through private placements with a group of non-bank financial institutions.

These deals align with Emirates’ strategy to seek diverse financing sources, and underscore its sound financials and the strong investor confidence in the airline’s business model.

Emirates closed the financial year with a healthy and new record of Dh14.1bn ($3.8bn) cash flow from operating activities.   

Revenue generated from across Emirates’ six regions continues to be well-balanced, with no region contributing more than 30 per cent of overall revenues. Europe is the highest revenue contributing region with Dh24bn ($6.5bn), down 5 per cent from 2014-15.

East Asia and Australasia follows closely with Dh22.4bn ($6.1bn), down 9 per cent. The Americas region recorded revenue growth at Dh12bn ($3.3bn), up 9 per cent.

Africa and Gulf and Middle East revenue decreased each by 3 per cent to Dh9.1bn ($2.5bn) and Dh8.4bn ($2.3bn) respectively; and West Asia and Indian Ocean revenue decreased by 4 per cent to Dh7.6bn ($2.1bn).

In line with its customer-focused proposition, Emirates invested over Dh80 million ($21.9 million) last year to install and operate inflight connectivity across its fleet, which is now 70 per cent Wi-Fi enabled. The airline also launched revamped amenity kits for First and Business class customers, a new range of children’s toys and activity packs onboard, unveiled an enhanced fully-flat Business class seat for its 777-300ER fleet, and launched its two-class configured A380 featuring the largest personal inflight entertainment screens in Economy Class.

Emirates also opened new dedicated airport lounges in Tokyo Narita and Cape Town, taking the number of dedicated Emirates Lounges across the world to 39, having invested more than $352 million in its lounge programme since inception.

For 2016-17, Emirates has announced new routes to Yinchuan and Zhengzhou in China, Yangon in Myanmar and Hanoi in Vietnam, aside from capacity upgrades to existing destinations.

Emirates SkyCargo continues to play an integral role in the company’s expanding operations, contributing 14 per cent of the airline’s total transport revenue.

Emirates’ cargo division reported a revenue of Dh11.1bn ($3.0bn), a decline of 9 per cent over last year, while tonnage increased by 6 per cent to reach 2.5 million tonnes in an airfreight market that remained challenging with fast-changing demand patterns. This year, freight yield per Freight Tonne Kilometre (FTKM) decreased sharply by 16 per cent, and was also impacted by the weakening of major currencies.

In addition to belly-hold capacity to Emirates’ new passenger destinations, Emirates SkyCargo increased freighter operations to Mexico City, and launched new freighter services to Ho Chi Minh City (Vietnam), Ahmedabad (India), Columbus (USA), Algiers (Algeria), and Ciudad Del Este (Paraguay).

During 2015-16, Emirates SkyCargo officially inaugurated its purpose-built cargo terminal for freighter operations at Al Maktoum International airport (DWC), and received delivery of a Boeing 777F, rounding off its total freighter fleet to 15 aircraft: 13 Boeing 777Fs, and two Boeing 747-400Fs.

Emirates’ hotels recorded revenue of Dh700 million ($191 million), an increase of 1 per cent over last year.