Emirates H1 profit sags 76pc on fuel costs, FX

DUBAI: Emirates airline, the state-owned carrier which is on an aggressive expansion path, reported a 76-percent slump in first-half net profit on Thursday, hit by soaring fuel costs and currency fluctuations.

The Dubai government-owned airline, the largest customer of the Airbus A380 superjumbo, said it had profit of 827 million dirhams ($225 million) for the six months ended Sept. 30. That compared with profit of 3.4 billion dirhams in the prior-year period.

Its financial year runs April 1 to March 31.

"Emirates remained focused on its long-term strategy despite global instability, ever climbing fuel prices which resulted in Emirates paying $1 billion more in fuel costs over the same period last year and fluctuating exchange rates," its chairman, Sheikh Ahmed bin Saeed Al-Maktoum, said in a statement.

Brent crude, which peaked around $127 in February, were some 30 percent higher during Emirates' reporting period this year over last year.

The airline said currency translation differences resulted in a 24 million dirhams loss in the period compared to a 24-million dirham gain last year.

Revenue, including other operating income, was 30.3 billion dirhams, an increase of 15 percent from 26.4 billion dirhams recorded last year.

The carrier said its passenger seat factor, a key measure of profitability, was above 79 percent. That was below the 81.2 percent seen in the same period in 2010. Its cash position stood at 13.8 billion dirhams on Sept. 30 compared with 14 billion dirhams on 31 March 2011, it said.

Emirates results come just days ahead of the Dubai Airshow, which starts on Nov. 13 and where the state-backed carrier is expected to announce more plane orders to feed its fast-paced expansion plans into Europe, Asia and other markets.

It has an order backlog worth over $66 billion, including 73 more A380 aircraft.

Industry body IATA has warned that it expects airlines to suffer a weak end to the year due to waning consumer confidence, sluggish international trade and high fuel prices.

European carriers like Lufthansa and Air Berlin reported a drop in third-quarter profits last month.

The rapid expansion of Emirates -- as well as Gulf majors Etihad of Abu Dhabi and Qatar Airways -- has unnerved older airlines and fuelled mutual accusations of protectionism. Many carriers fear Gulf-based superjumbos will drain their own hubs.

The group launched a $1 billion bond in June, which was over five times oversubscribed.