Emirates expects to return to $1bn profit next fiscal

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Emirates airlineEmirates airline expects to return to the $1 billion (Dh3.67bn) profit mark in its next financial year, according to a top airline executive.

"We crossed the $1bn mark in profits the year before last, with profits resting at $1.4bn. And then last year our profits fell due to the economic recession. I don't think this year we would be able to achieve those numbers. But it is quite possible we may cross the $1bn profit mark in the following year," Maurice Flanagan, Executive Vice-Chairman, Emirates airlineEmirates airline and Group, told Emirates Business.

Attributing the reasons behind his confidence, Flanagan said: "This is because we are taking out all the extra costs. And on an average, over the next 12 years, we would be taking deliveries of two big aircraft per month - the Airbus A380 or the Boeing 777."

The airline more than doubled its fiscal first-half profit on cost cuts and lower fuel prices, with profits for the year ending September 30, 2009, resting at $205million, and warned at the same time that it would take time for travel demand to come back significantly.

When asked about the profit projections for the full year, Flanagan said: "I cannot give that right now but all I can say is the second half would be better than the first half. I cannot say anything about what kind of profits we would be making in the second half because the overall market and the overall demand - both are so volatile right now."

Meanwhile, EmiratesEmirates' President Tim Clark recently said that the company expects to beat forecast and make a "20 per cent growth in profits" at the end of its current fiscal year as oil prices have fallen much lower this year.

"We managed to make a profit in the first half of this year of $205m, which is not that good. Again, we made a profit of $77m in the previous year so we didn't do well even then.

Actually, the total revenue was down but costs were even further down. Hence, we managed to increase our profit. But we carried over 13 million passengers and over 700,000 ton of cargo in the last half year. So it has been a very good last year," said Flanagan.

Looking ahead, he said that forward bookings for the airline show that "December should be a good month for EmiratesEmirates, and January possibly even better".

"So we are bucking industry trend. We are keeping costs down. We are not employing a single extra person. We have got 10 more big aircraft coming in towards the end of our current financial year," said Flanagan.

With regards to the future demand, Flanaga said: "It may take another two or three years before the demand for the whole airline industry starts to pick up again. Having said that EmiratesEmirates' demand is steady."

By Shweta Jain

© Emirates Business 24/7 2009