Amazing Airline Profitability

Yes, you
read the headline correctly.  At a time
when many airlines are continuing to report losses, United and Continental tell
us they need to merge in order to compete viably, and so too do American,
British Airways, and Iberia tell us they need to be able to merge their
operations across the Atlantic so as to compete with other major alliances, one
single unaligned airline has just reported a $1.1 billion net profit for the last
year.  Not only is this a staggering
amount of profit, it is their best profit ever. 
And at a time when other airlines are reporting declines in their
international traffic, this airline reports an astonishing 21% growth in
passenger numbers.


Emirates-airline 
Well
deserved congratulations go to Emirates for this extraordinary result.

Looking
beyond the massive billion-dollar profit, it is interesting to see that
Emirates achieved this (almost exactly 2 1/2 times its profit the previous year)
in a year where, notwithstanding a 21% growth in passenger numbers, gross
revenue stayed almost flat.  Emirates was
assisted by lower fuel costs last year, and good cost control across the board.  The airline is responding to its great year by rewarding all eligible staff with a generous bonus and pay rise.

During the
last year, Emirates added three new destinations – Durban (South Africa), Luanda
(Angola) and Tokyo (as well as adding extra flights on existing routes).  The airline took delivery of another 4 A380s,
and 11 777s.  It is now the world's
largest operator of 777s (it now has 78 in its fleet) and the second largest
operator of A380s (Emirates currently has eight, with another 50 on order;
Singapore Airlines has 10, with another nine on order and six extra on option).

Detractors
of this extraordinarily well-run and profitable airline try to suggest that
Emirates in some way enjoys an unfair advantage over the rest of the world's
airlines.  This is absolutely not true,
and is discussed and rebutted in detail in my article, ‘Does Emirates Enjoy an
Unfair Advantage?
’.  The only advantage
that Emirates has is that it has decided to take the high road, to provide
excellent service at a good value price.

Other airlines might do well to take notice.

3 thoughts on “Amazing Airline Profitability”

  1. I am sorry while I enjoy your columns I am not buying the EK line. They charge very low fares on many of thier routes and owe a ton of money for all thier aircraft so how can they make the profit they claim. They have very low wages across the board and that helps – even the pilots are low paid compared to US and EU airlines but I can’t see that making the difference. After having lived and worked in the ME for 18 years my guess is that it’s the usual smoke and mirroes accounting in that part of the world which allows them to claim they made the profit they say they did.
    I enjoy your newsletter – just dubious about this.

  2. You really need to read my specific article on Emirates and their profitability. In it you’ll see that their accounts are externally audited each year, so with that in mind, I don’t think there’s appreciable smoke and mirrors at all.
    As to paying their staff, my understanding is they pay reasonably well and I know lots of people are keen to work for them, and delighted when they do/can.
    I’m not sure how much money they owe on their planes, but what is your point? I do recall they have something like US$4 billion in free cash on hand as well….. 🙂

  3. Pingback: This Week’s Airline Roundup 1 » The Travel Insider

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