Emirates’ profit plunges: Are the good days over?

Courtesy EPA

Emirates Airlines posted its weakest earnings in a decade – its profit at Dh871m (US$237m) plunged 69 per cent for the year ending March 31.

The airline’s chairman Sheikh Ahmed bin Saeed Al Maktoum attributed the lacklustre performance to higher oil prices, competition, weakening of travel demand particularly in the Gulf region, and strengthening of the US dollar.

Was 2018/19 merely an exceptionally tough year, or is it a sign that the good days are coming to an end?

Emirates has been very successful in operating inter-continental flights, hubbing at Dubai International Airport. However, with more airlines mounting direct flights, Emirates may face the challenge to fill up its fleet of A380 superjumbo. Its reliance on Asia-Pacific traffic to connect through Dubai to Europe has also been affected by the spread of terrorist attacks that are turning travellers away.

Going forward, Sheik Ahmed bin Saeed Al Maktoum said: “We expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand.”

Interestingly, Emirates will be introducing a premium-economy class next year to help broaden its appeal. Known to have modelled itself after Singapore Airlines (SIA) in its early years of formation, Emirates is going through the same kind of pain that SIA experienced. And a little lately. SIA had for some time fought shy of going the premium-economy way, and is now competing aggressively to lead the pack.

The danger with success is how one thinks the good days will never come to an end so long as one continues to do what one has been doing. We forget that things are constantly changing around us.

Emirates’ profit plunge may signal something wider in the Gulf region. Last year Qatar Airways reported a loss of 252m riyals (US$67m), attributing it largely to a political dispute that resulted in a ban on the airline by Saudi Arabia, the UAE, Egypt and Bahrain. It expects to make a loss again this year.

Etihad Airways too has been incurring losses since 2016. Last year it posted a loss of US$1.28b. The Abu Dhabi-based airline has since shifted its focus on acquiring stakes in other airlines to build up its intercontinental network to focusing on operating point-to-point flights. There is rumour that it may eventually be assimilated by rival Emirates.

So true it is that one’s fortune may change depending on how and where the wind blows. You can’t ever rest on your laurels.

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About Dingzi
Writer by passion, with professional expertise in aviation, customer service and creative writing. Aviation veteran with more than 30 years' experience, columnist, pubished author of fiction, poetry, plays and travel stories, editor and management consultant. Nature lover who abhors cruelty of any form to animals, and a tireless traveler.

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