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Emirates Group Suffers 70% Profit Loss

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emirates

By Dipo Olowookere

The Emirates Group has released its 2016-17 Annual Report and it showed that the Arab firm’s profit depreciated from what was obtained last year by 70 percent.

It was learnt that the group made $670 million as profit in the financial year ending March 31, 2017, while its turnover hit $25.8 billion with a huge workforce of 105,000.

However, this is the 29th consecutive year of profit and steady business expansion for Emirates Group despite a turbulent year for aviation and travel.

Business Post gathered that the firm’s revenue reached $25.8 billion, an increase of 2 percent over last year’s results, while its cash balance decreased by 19 percent to $5.2 billion, mainly due to the repayment of two bonds on maturity and ongoing high investments into its fleet and aircraft related assets.

In line with the current business climate and to support the future investment plans of the Group, it said no dividend payment would be made to the Investment Corporation of Dubai (ICD) for 2016-17.

Commenting, Chairman and Chief Executive of Emirates Airline and Group, Sheikh Ahmed bin Saeed Al Maktoum, “Emirates and dnata have continued to deliver profits and grow the business, despite 2016-17 having been one of our most challenging years to date.

“Over the years, we have invested to build our business capabilities and brand reputation. We now reap the benefits as these strong foundations have helped us to weather the destabilising events which have impacted travel demand during the year – from the Brexit vote to Europe’s immigration challenges and terror attacks, from the new policies impacting air travel into the US, to currency devaluation and funds repatriation issues in parts of Africa, and the continued knock-on effect of a sluggish oil and gas industry on business confidence and travel demand.”

In 2016-17, the Group collectively invested $3.7 billion in new aircraft and equipment, the acquisition of companies, modern facilities, the latest technologies, and staff initiatives.

Sheikh Ahmed said, “These investments will further strengthen our resilience, even as we extend our competitive edge, and adapt our businesses to the volatile business climate and fast changing consumer expectations.”

“We remain optimistic for the future of our industry, although we expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” he added.

“Emirates and dnata will stay attuned to the events and trends that impact our business, so that we can respond quickly to opportunities and challenges. We will also progress on our digital transformation journey.

“We are redesigning every aspect of how we do business, powered by an entirely new suite of technologies. Our aim is to deliver more personalised customer experiences, and seamless customer journeys, and make our operations and back-office functions even more efficient,” he further said.

Across its more than 80 subsidiaries and companies, the Group increased its total workforce by 11 percent to over 105,000-strong, representing over 160 different nationalities.

Emirates’ total passenger and cargo capacity crossed the 60 billion mark, to 60.5 billion ATKMs at the end of 2016-17, cementing its position as the world’s largest international carrier. The airline increased capacity during the year by 4.1 billion Available Tonne Kilometres (ATKMs), or 7 percent over 2015-16.

During the period, Emirates said it received 35 new aircraft, its highest number, comprising of 19 A380s and 16 Boeing 777-300ERs.

At the same time 27 older aircraft were phased out, bringing its total fleet count to 259 at the end of March. This fleet roll-over involving 62 aircraft was the largest programme it has ever managed in a year, and it brought Emirates’ average fleet age down significantly to 63 months, compared with 74 months last year, and the industry average of 140 months.

During the year, Emirates launched six new passenger destinations: Fort Lauderdale, Hanoi, Newark, Yangon, Yinchuan and Zhengzhou; and one new additional freighter destination: Phnom Penh. It also added services and capacity to nine cities on its existing route network across Africa, Asia, Europe, the Middle East, and North America, offering customers even greater choice and connectivity.

Against significant currency devaluations against the US dollar and fare adjustments due to a highly competitive business environment, Emirates managed to keep its revenue stable at $23.2 billion. The relentless rise of the US Dollar against currencies in most of Emirates’ key markets had a $572 million impact on airline revenue, and to the airline’s bottom line. It was the 2nd largest measured in a financial year after last year.

Total operating costs increased by 8 percent over the 2015-16 financial year. The average price of jet fuel fell slightly during the financial year. But due to an 8 percent higher uplift in line with capacity increase, the airline’s fuel bill increased by 6 percent over last year to $5.7 billion.

Fuel is now 25 percent of operating costs, compared to 26 percent in 2015-16, but it remained the biggest cost component for the airline.

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.

Emirates carried a record 56.1 million passengers (up 8%), and achieved a Passenger Seat Factor of 75.1 percent. The decline in passenger seat factor compared to last year’s 76.5 percent, is relative to the strong 10 percent increase in seat capacity by Available Seat Kilometres (ASKMs), and also in part due to lingering economic uncertainty and strong competition in many markets.

Under pressure from the weakening of all major currencies against the USD, passenger yield dropped to 6.7 US cents per Revenue Passenger Kilometre (RPKM).

To fund its fleet growth in a year of record aircraft deliveries, Emirates raised $7.9 billion, using a variety of financing structures.

Emirates continued to tap the Japanese market for the Japanese Operating Lease (JOL) structure and Japanese Operating Lease with a Call Option (JOLCO) on both A380-800 and Boeing 777-300ER aircraft, while further accessing a diverse institutional investor and bank market base including Korea, the United Kingdom, Germany and Spain. Further and owing to the suspended Export Credit Agency (ECA) support, Emirates successfully structured an innovative $1.2 billion commercial bridge facility with US and Chinese 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 $4.3 billion of cash assets.

Emirates continued to invest in refreshing its product and services in line with changing customer needs. The airline revealed its enhanced A380 Onboard Lounge which will enter service in July 2017, and announced a significant, multi-million dollar deal with Thales to equip its future Boeing 777X fleet with Thales’ AVANT inflight entertainment system.

In an airfreight market that remained challenging with fast-changing demand patterns, Emirates’ cargo division reported a revenue of $2.9 billion, a decline of 5 percent over last year, while tonnage carried slightly increased by 3 percent to reach 2.6 million tonnes.

Emirates’ hotels recorded revenue of AED 738 million (US$ 201 million), an increase of 5% over last year in a highly competitive market mainly in the UAE.

In its 58 years of operation, 2016-17 has been dnata’s most profitable yet, crossing $330 million profit for the first time.

Building on its strong results in the previous year, dnata’s revenue grew to $3.3 billion, up 15 percent. dnata’s international business now accounts for 66 percent of its revenue.

In line with revenue growth, the number of aircraft handled by dnata in the UAE increased 2 percent to 216,000, and Cargo handling by 4 percent to 714,000 tonnes showing a first turnaround sign of the cargo industry’s ongoing malaise.

Dipo Olowookere is a journalist based in Nigeria that has passion for reporting business news stories. At his leisure time, he watches football and supports 3SC of Ibadan. Mr Olowookere can be reached via [email protected]

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Travel/Tourism

Airlines Fault Claims of Unpaid NCAA Regulatory Fees

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Modular Refinery for Aviation Fuel

By Adedapo Adesanya

The Airline Operators of Nigeria (AON) has denied owing cost recovery charges to the Nigeria Civil Aviation Authority (NCAA), insisting that all services rendered by the regulator to domestic airline operators are paid for fully in advance on a cash-before-service basis.

In a statement from the airlines’ body, it was emphasised that no domestic airline in Nigeria receives NCAA regulatory services without first making full payment of invoices issued to it by the agency, describing suggestions of the indebtedness for regulatory services as factually inaccurate.

It said that what the NCAA refers to as ‘outstanding charges’ relates solely to the 5 per cent Ticket Sales Charge (TSC), a tax imposed by the NCAA on passengers, which it said is not in consonance with the dictates of international aviation.

The AON then urged the federal government to urgently amend the Civil Aviation Act to empower the NCAA to collect whatever appropriate fees and charges are due it directly from passengers or whoever else, without routing such through the domestic airlines, from June 1, 2026.

It said doing this will relieve domestic airlines of the financial burden of acting as collection agents for the NCAA, since airlines currently bear banking transfer charges and other transaction costs in the process of transmitting funds to the organisation.

The airline body reiterated its position that the NCAA is a regulator, not a revenue-generating agency and that it does not fund any aspect of the airline businesses or render any direct service to passengers.

The AON said every service the agency provides to airline operators is fully paid for in advance before it is rendered.

“The AON notes that several member airlines maintain dedicated accounts, from which the NCAA draws down its monthly remittances, until the force majure caused by the Iran-Israel/USA conflict, which had put a lot of financial pressure on airlines worldwide.

“Notwithstanding this arrangement, the AON had formally appealed to the federal government through the office of the Minister of Aviation and Aerospace Development, to suspend the payment of all statutory charges temporarily, as an interim measure to assist airlines in managing their cash flows during the current period of severe financial stress caused by the increase in the cost of Jet A1.

“As an interim response, President Bola Tinubu graciously granted a 30 per cent concession while waiting for the government’s decision on the other aspects of the AON intervention request.

“While the AON acknowledges and appreciates this gesture, we had appealed for a meeting with Mr President to discuss further reliefs, a request that is yet to be granted,” the AON said.

Speaking further on reports that airlines owe billions in debt to the NCAA, the AON said the 5 per cent Ticket Service Charge in question was introduced over 45 years ago under the Government of General Gowon by the then Federal Civil Aviation Authority (FCAA) and its continued relevance has not been reviewed ever since.

It further stated that domestic airlines, in addition to the 5 per cent TSC, still pay separately ànd directly for services provided by the various industry agencies, including the NCAA itself.

AON said that the 5 per cent TSC is an ad valorem tax applied to an airline’s gross earnings, not profits and that the global aviation industry operates at a profit margin of between 1.5 per cent and 2.5 per cent at best.

“The AON remains committed to constructive engagement with the government and all stakeholders to achieve a growth-oriented sector, designed to enable the accelerated growth of key sectors of the economy and the improvement and sustenance of a healthy quality of life for the citizenry,” it said.

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Airline Remittances: NCAA Halts Enforcement of ‘No Pay, No Service’ Policy

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By Adedapo Adesanya

The Nigeria Civil Aviation Authority (NCAA) has announced the temporary suspension of its “no pay, no service” directive earlier issued to airlines with outstanding statutory remittances, citing ongoing consultations and prevailing operational challenges in the aviation sector.

In a statement, the authority said the decision followed a review of industry conditions, particularly the rising cost of aviation fuel, which has placed significant financial pressure on domestic carriers and threatens overall sector stability.

However, the NCAA stressed that the suspension does not amount to a waiver, cancellation, or forgiveness of the debts owed by the affected airlines, noting that such decisions fall outside its regulatory mandate.

The agency recalled that President Bola  Tinubu had earlier approved a 30 per cent discount on outstanding statutory charges owed by domestic airlines to aviation agencies, as part of broader government efforts to cushion the impact of high Jet A1 fuel costs and stabilise the industry.

According to the NCAA, airlines remain fully responsible for settling their obligations, adding that it would engage operators individually to ensure compliance through structured repayment arrangements that do not disrupt operations.

The regulator also clarified the nature of the 5 per cent Ticket and Cargo Sales Charge, describing it as a statutory levy mandated by the Civil Aviation Act and embedded in the cost of air travel and cargo services.

It explained that the charge is collected by airlines at the point of ticket and cargo sales on behalf of the aviation system and must be remitted accordingly.

The organisation emphasised that the funds do not constitute revenue or profit for the airlines and should not be treated as such.

It further noted that the revenue from these charges is distributed among key aviation institutions, including the regulator itself and other service providers, all of which play vital roles in ensuring safe, efficient, and internationally compliant aviation operations.

It added that the NCAA operates on a cost-recovery basis and does not receive direct funding from the Federal Government for its routine regulatory activities, making timely remittance of statutory charges critical to sustaining its oversight functions.

The suspension of the enforcement directive, it said, is a measured step aimed at maintaining operational stability in the sector while reinforcing the obligation of airlines to remit collected charges.

The NCAA reaffirmed its commitment to balancing regulatory enforcement with industry sustainability, warning that statutory funds already collected must be remitted for their intended purposes.

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Emirates Skywards Commences ‘Season of Rewards’ Campaign

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Emirates Skywards

By Modupe Gbadeyanka

A new campaign designed to celebrate its passengers across the globe has been launched by Emirates Skywards, a statement from the company confirmed.

The promotion is known as Season of Rewards, and will run from May 21 to August 31, 2026, with beneficiaries getting different rewards for their patronage.

The Skywards Season of Rewards offers more savings with Cash+Miles on Emirates and flydubai, with members unlocking twice the savings, including enhanced Cash+Miles rates across the Emirates and flydubai network when booking flights and extras (excess baggage, lounge access and seat selection. The offer applies across all classes of travel, fare brands and destinations on both airlines. With the limited-time offer, 2,000 Skywards Miles can unlock savings of $30 instead of $15.

In addition, passengers will receive extra tier benefits for travel up until August 31, 2026. Members earn a 20 per cent bonus Tier Miles on every Emirates or flydubai flight, helping members move through the tiers faster. With reduced Tier Miles required during this period, it’s now even easier for members to renew or upgrade their membership status.

Also, they will get 50 per cent bonus Miles with travel partners, including Emirates Skywards Hotels, Marriott Bonvoy, IHG Hotels and Resorts, Jumeirah and more. However, registration is required to participate, and bonus Miles will be credited within 60 days after the end of the offer period.

Further, Skywards members can book their next reward flight and extras with Miles, starting from 4,500 Miles instead of 9,000 Miles during the promo period across all routes, cabins and fares.

“Skywards Season of Rewards reflects our continued commitment to creating even more value for our members worldwide.

“Whether members are planning a family holiday, a Dubai stopover, a weekend escape, or simply looking to maximise rewards across their travel spend – this initiative unlocks more opportunities to earn, save and experience the world with Emirates Skywards,” the DSVP Emirates Skywards, Nejib Ben Khedher, said.

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