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Emirates reeling from 69% profit drop? Bonus cuts, CCO resigns

Emirates employees will miss out on their annual bonus in light of drastic drop in profits.

Employees will have to forego their expected bonus of five weeks' salary's worth Chief Commercial Officer (CCO) Thierry Antinori has resigned for unrevealed reasons Emirates is set for a "rebound" post Ramadan and during the summer

Emirates is still reorienting following the release of its annual earnings report. For one, it will not be handing out employee bonuses. Also, its CCO (Chief Commercial Officer) has now resigned. 

Missed profit targets equals 0 bonuses for employees

According to the media, Emirates will not be handing out extra compensation to its employees in 2019, an Emirates spokeswoman confirmed.

“The [Emirates] Group typically gives the benefit to employees through a profit-sharing scheme at the end of each financial year,” The National explained. 

“Last year, Emirates employees received a payout following the announcement that the airline made AED 4.1 billion ($1.1 billion) in profit for the financial year ended March 2018,” Gulf News reported. “The bonus was equivalent to five weeks’ salary, and also applied to the rest of the staff at Emirates Group.”

Emirates Group employs 105,286 people across 120+ subsidiaries. The Group’s total workforce increased by 2% during the financial year 2018-2019, representing over 160 different nationalities.

CCO departs

On Sunday, an Emirates spokesperson confirmed that the airline’s Chief Commercial Officer (CCO) Thierry Antinori had resigned. He had been employed at the company for eight years (since 2011), serving for the last six years as CCO. 

“Antinori, also an executive vice president, was responsible for commercial operations, products, the frequent flyer program and cargo division, according to Emirates’ website,” Reuters said. 

The CCO role will be taken over by Adnan Kazim, divisional senior vice president, strategic planning, revenue optimization & aeropolitical affairs, Emirates has said. 

No cause for concern for Emirates or its staff

AMEinfo consulted expert Saj Ahmad, Chief Analyst at StrategicAero Research, to gauge Emirates’ situation right now.

“Looking at the bigger picture, the decision not to pay bonuses is a short term issue based on prevailing market competitiveness and disciplined cash management,” he said. 

“This is why Emirates is sitting atop a huge $6bn+ warchest,” he continued. “It’s impossible for any business to continue paying bonuses when profitability is impacted – and this wholly shows Emirates fiscal clarity to those who claim the airline is subsidized. It isn’t and never has been. It’s accounting is visible for all to see.”

However, greater times lie ahead for Emirates. 

“Lest we forget, by the time Emirates reports first half earnings later this year, it will be on the back of a post-Ramadan and busy summer period – there will be a rebound.

“Further, the departure of Mr Antinori could be down to many reasons – it’s perhaps prudent not to wrongfully speculate, but Emirates is an airline changing with the times – sometimes that necessitates staff changes too.

“Given the Emiratization programmes, it’s not out of the realm that Mr Antinori wanted a new challenge. Regardless, Emirates has enough home grown talent to pick up the slack with instant ease,” he concluded.

Rising fuel costs

When Emirates released its earnings report for the financial year of 2018-2019 last week, it was standard order of business as usual, except for one glaring issue. 

The airline reported profit of AED 871 million ($237 million), down by 69% from last year. 

Emirates cited several factors, primarily rising fuel costs, as the cause behind the drop in profit.

“2018-19 has been tough, and our performance was not as strong as we would have liked,” Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group, said. “Higher oil prices and the strengthened US dollar eroded our earnings, even as competition intensified in our key markets.”

Indeed, other airlines such as flydubai have experienced similar fallout from the ever-increasing cost of jet fuel when disclosing their annual financial reports. 

Emirates remains an undisputed titan of the industry

As a whole, Emirates is continuing to see strong perfomance in other metrics, such as solid revenue and passenger figures. 

The airline’s revenue increased by 6% to AED 97.9 billion ($ 26.7 billion), supported by steady passenger and cargo performance.  Overall passenger traffic remained steady, as Emirates carried 58.6 million passengers (up 0.2%).