Emirates Airline is projecting its profitability will remain flat during its next financial year amid the continuing rise in oil prices which is forcing it to examine the re-introduction of fuel surcharges on certain routes.
The Dubai-based airline is budgeting a profit of 5 billion dirhams [$1.37 billion] for the year ending on 31 March 2009, says president Tim Clark, a repeat of its achievement in 2007/08 - itself a 62% rise on the previous year.
Clark blames the flat outlook on “increasing fuel prices” and says that several measures are being examined to counter the spiralling cost of oil.
While Emirates dropped fuel surcharges last year, Clark says it is being forced to re-evaluate that policy due to ongoing oil price hikes. The 2007/08 result included “a $516 million delta in fuel costs, versus our budgeted plan” despite the airline’s fuel price hedging. Clark warns: “We’ll introduce surcharges where we have to. Some markets will take it and others won’t”.
The airline’s seat load factor rose three points to 79.2% in 2007/08 and Clark wants further improvements this year. “We’re targeting a rise of five points to 85%, which would equate to a 7-10% increase in revenue,” he says.
The airline, which had set a target of $100 million in cost savings last year, will have to “revisit that and better it by around 50% this year, which is difficult when you’re in expansion mode”, says Clark.
Meanwhile Clark is hopeful Emirates will be able to make the long awaited move into Dubai international airport’s Terminal 3 before year end.
He says the building’s “construction is complete” and “testing under load” should begin soon. “I hope it will open in fourth quarter,” he says. This would dovetail with the introduction of the airline’s A380 services on flights to New York and London Heathrow.
Source: flightglobal.com's sister premium news site Air Transport Intelligence news
Source: Flight International
