Emirates still growing strongly but fuel costs hit profit increase

'We were hit by a double whammy of higher fuel costs and increased competition,' Chairman Sheikh Ahmed bin Saeed Al Maktoum told a press conference.'Our fuel surcharges only clawed back 41% of the higher jet fuel costs which now represent 27 per cent of the cost of flying compared with 13 per cent five years ago. We have also faced increased competition on many routes.'

Yet Emirates Airline is not about to throw in the towel. Sheikh Ahmed boldly predicted profits growth of 13 per cent in the next financial year, although he admitted much would depend on how fuel costs fared over the period.

$105m dividend

The Emirates Group is to pay its 100% shareholder Dubai Government a $105 million dividend, and clearly continues to re-invest most of its profits in buying new aircraft. In the 2005/6 financial year Emirates added 16 aircraft to its fleet which now comprises 83 wide-bodied passenger aircraft and nine freighters with an average age of 61 months.

At the Dubai Air Show last autumn Emirates signed a $9.7 billion contract for 42 Boeing 777 aircraft, bringing the airline's total order book to $33 billion. Over the next eight years the airline will receive an average of one new aircraft each month.

By 2010 Sheikh Ahmed said the airline will have 156 aircraft, with the Airbus A380 super jumbo due to touch down in Dubai in mid-April next year ready to go into service in the summer. And whether Emirates is the first airline to fly the A380 or not now depends on which manufacturer completes the engines in time for the first delivery.

15m visitors by 2012

For Emirates remains at the forefront of Dubai's ambitions to expand its tourism to 15 million visitors a year by 2012, almost treble the current figure. Indeed, Sheikh Ahmed said that the main barrier to reaching that number is the pace of hotel building in Dubai rather than the expansion of his airline.

He also refuted accusations that Emirates receives hidden government support and subsidies, noting that the group's success is based on a sound and simple business model which focuses on growth and investing in innovation as well as levering on the natural economic advantages of Dubai as a business and tourism centre.

Emirates SkyCargo carried more than one million tonnes of cargo last year, growing volumes by 22 per cent, while ground handling division Dnata reported a 26% growth in revenues to $485 million. There was also a nine per cent growth in total Emirates Group staff to 29,906 with 60 new cabin crew recruits each week.