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AVIATION

Emirates reports half year profits of US $ 225 m

Despite global challenges:

Emirates airline produced a net profit of Dhs 827 million (US $ 225 million), for the first six months of its current financial year ending September 30, 2011. The airline continues to be the fastest growing airline in the world and continues to make a profit despite unstable global economic, geopolitical and environmental conditions.


Since March 31, 2011, Emirates airline expanded its fleet with ten new aircraft.

Emirates remains on its strong growth trajectory which over the past seven years has seen the airline grow from a fleet of 60 aircraft, in 2004, to its current 161 wide-bodied aircraft including, the largest fleet of A380s with 17 and the largest fleet of Boeing 777s with 93. In addition, the company’s revenue has increased steadily by 20 percent per annum over the same time period resulting in a record 23 years of profitability, unmatched by any other airline.

Since 2004, when Emirates acquired its first long-haul wide-body aircraft, allowing for much broader global expansion, the airline has opened 39 new outstations and now flies to 115 destinations in 67 countries. Emirates continues to expand its global footprint, having launched Geneva, Copenhagen and St. Petersburg since April 2011 and will continue with eight additional new route launches including Baghdad on November 13 and Rio de Janeiro, Buenos Aires, Harare, Lusaka, Dallas, Seattle and Dublin in early 2012.

“Emirates remained focused on its long-term strategy despite global instability, ever climbing fuel prices which resulted in Emirates paying US $ 1 billion more in fuel costs over the same period last year and fluctuating exchange rates,” said Emirates Airline and Group Chairman and Chief Executive Sheikh Ahmed bin Saeed Al-Maktoum. “The global challenges of the past six months have again put Emirates to the test, and once again we have risen to the challenge and continue to maintain our high standards of product and services,” he said.

“Emirates’ latest half-year performance is testament to the airline’s strong business foundations and tenacity to stay on course and continue to grow despite the unsteady marketplace,” he added. “We have continued to invest in our eco-efficient aircraft fleet; in strengthening our global route network; and also in supporting the infrastructure for our growing business and it continues to pay off,” he said.

In the first-half of its financial year 2011-12, Emirates posted strong business growth, both in terms of capacity on offer and traffic carried, performance that has been in stark contrast to the current trend seen across the aviation industry. Capacity measured in Available Seat Kilometres (ASKM), grew by 8.2%, while passenger traffic carried measured in Revenue Passenger Kilometres (RPKM) was up 5.7 percent with Passenger Seat Factor sustained at a high level, averaging 79.3 percent despite the growth in capacity, slightly below last year’s record for a six month reporting period of 81.2%. The volume of cargo uplifted was in line with last year.

Emirates revenue, including other operating income, of Dhs 30.3 billion (US $ 8.3 billion) was higher by 15 percent compared with Dhs 26.4 billion (US $ 7.2 billion) recorded last year, largely reflecting improved passenger and cargo yields based on increased fuel prices.

Emirates’ cash position on September 30 remained strong with Dhs 13.8 billion (US $ 3.8 billion), compared to Dhs 14.0 billion (US $ 3.8 billion) on March 31, 2011.

Maintaining this cash balance was achieved after settling capital outflows of more than Dhs 4 billion, primarily towards aircraft pre-delivery payments’, other aircraft assets and repayment of bond financing. During the first half, the airline has also successfully raised financing of US $ 1 billion through the issue of a new bond, as well as financing ten new aircraft deliveries, reflecting strong investor confidence in Emirates business model and financial performance.

Emirates’ current fleet size is 161 aircraft.

Since the beginning of its current financial year, the airline has received delivery of ten new wide body aircraft, with another 13 new aircraft scheduled to be delivered before the end of the financial year (March 31, 2012).


‘Aviation is a team effort’:

Working together delivers economic benefits - IATA

The International Air Transport Association (IATA) urged cooperation and innovation across the aviation value chain and with governments to take advantage of aviation’s ability to drive economic growth.

“The global connectivity that aviation provides is the lifeblood of the global economy. Around the world, aviation supports 33 million jobs and $ 3.5 trillion in economic activity - $1.2 trillion of this in the US alone. The world is thirsty for our product, giving us tremendous potential for growth and innovation. But there are no guarantees in turning that potential into reality. Aviation is a team effort. The industry value chain and governments must work even more closely together to ensure safe, secure, efficient and environmentally responsible air services,” said IATA’s Director General and CEO Tony Tyler, in an address to the International Aviation Club in Washington.


 Tony Tyler

Tyler highlighted safety as an example of the success that can be achieved when industry and governments work together with a common goal that drives constant innovation. “In the decade ending this year, airlines will have safely transported over 23 billion people and nearly 426 million tonnes of cargo. Those amazing statistics are the result of our rich history of working together to address the fundamental challenge of safety with global standards that are consistently applied,” said Tyler.

Tyler also focused on aviation’s environmental challenge. “Aviation has the most ambitious environmental commitments of any industry sector, including cutting net emissions in half by 2050 compared with 2005 levels. Sustainable biofuels have the greatest potential to contribute to this goal, with up to 80% reduction in CO2 over the lifecycle of the fuel. But the industry needs help to turn potential into reality. Specifically, we must work together to convince governments to take policy measures to support a framework for their success. It is in everybody’s interest to improve environmental performance, energy self-sufficiency and create jobs in the green economy,” said Tyler.

“Unfortunately, the attention of governments is being distracted by Europe’s unilateral plan to include international aviation in its emissions trading scheme. The industry supports market based measures - including emissions trading - that are globally coordinated through the International Civil Aviation Organization (ICAO),” said Tyler who noted that Europe’s plans are coming under increasing pressure as states express their concerns over sovereignty issues. The US is debating legislation to prohibit its carriers from participating and 26 states sponsored a declaration by the ICAO Council urging Europe’s governments to abandon their unilateral and extra-territorial plans and support the success of a global solution through ICAO. “I cannot think of another issue that touches international aviation, with the exception of safety, on which China, India, Russia, Japan and the US are in agreement,” said Tyler.

Tyler identified three additional areas where cooperation and innovation are needed:

Security:

IATA urged governments to support innovation to improve aviation security with IATA’s Checkpoint of the Future vision. “Airlines and governments have spent at least a cumulative total of $ 100 billion over the past 10 years on security. Unfortunately, for many of our passengers that investment has made security the single biggest point of dissatisfaction in the travel experience. It is often too slow, unpredictable and overly intrusive. IATA’s vision is for a Checkpoint of the Future that introduces a risk-based approach and uses technology solutions to allow a passenger to get from curb to gate without stopping to unpack or remove clothes,” said Tyler.

Tyler emphasized that risk-based screening does not infringe on privacy. “Known traveller programmes are completely voluntary. And for risk assessments we are only proposing to use information that is already collected for governments for the immigration process,” he said.

Taxation:

“Despite our vital economic role, politicians appear to value us more as surrogate tax collectors,” said Tyler noting IATA’s strong support of opposition to recent US proposals to double the passenger security fee and impose a $ 100 charge on every aircraft that takes off. “The purpose is primarily to generate funds for the treasury at the expense of travellers. Strong and united opposition from the aviation stakeholder community awakened firm resistance to the proposals in Congress. We must continue to work together to persuade lawmakers and regulators to focus on aviation as a catalyst for economic growth and job creation. We cannot do that if we are being buried in taxes,” said Tyler.

Regulation:

“Our challenge with governments is not just taxation. We suffer equally, if not more, from bad regulations,” said Tyler, citing US passenger rights regulation as an example. “Delays and flight cancellations are estimated to have cost the US economy some $ 31.2 billion in 2008. Yet we see regulation that is meant to protect passenger rights actually provide incentives to airlines to cancel flights because penalties for extended delays are so costly. Not only that, the regulation puts the entire burden on the airlines even though the responsibility for delays is often beyond their control. I am not arguing that airports and government agencies should also be subject to draconian fines for equipment failures or personnel shortages that result in passengers being unable to disembark. I am suggesting that we eliminate this economically damaging rule and replace a rigid culture of blame with a flexible structure mandating collaborative decision making among all the stakeholders,” he said.

Tyler said that through cooperation and innovation, aviation can meet its challenges. “Under my watch, IATA will continue to be a strong advocate of industry issues. But IATA will be even more effective as a voice in a strong chorus of industry advocates than as a soloist. And of course the message will resonate more effectively with those we seek to influence if we are in alignment, in harmony and delivering results,” Tyler said.

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