KIERAN DALY / DUBAI & ALEXANDER CAMPBELL / LONDON
Meanwhile, Dubai flag carrier lashes out at "ill-informed allegations" of hidden subsidies
Dubai-based carrier Emirates seems to have weathered the industry crisis, with rising revenue and profits in the year to 31 March 2002.
Load factor fell slightly to 68.3%, and overall yield across passenger and freight services was also down 5% to 1.66 dirham (45¢) per revenue passenger kilometre. The airline blamed three points of the drop on foreign exchange variation, and the rest on the slowing economy and the post-11 September fall in premium traffic. Continued strong passenger growth drove revenues up 11.7% to 7.3 billion dirham, giving net profits 11% higher at 468 million dirham - described by chairman Sheikh Ahmed bin Saeed al-Maktoum as "exceptional - probably unique".
Emirates cut costs by 5% in response to a 5% fall in traffic immediately after 11 September, but did so without making staff redundant, although it did freeze recruitment. Liquid cash reserves almost doubled over the year to 3.4 billion dirham, after a successful bond issue last July. Managing director Maurice Flanagan says that, although traffic from Europe fell sharply after 11 September, the airline has since largely recovered.
Meanwhile, Flanagan has made an outspoken counter-attack against claims that the state-owned carrier benefits from hidden subsidies as it sets about negotiating an increasing number of international route rights. His comments may be aimed at a US audience - specifically the Department of Transportation (DoT), whose view of Emirates will become critical as the airline prepares to launch US services. If the DoT demands concessions, Dubai's open skies policy means it will do so without fear of retaliation against US carriers.
Writing in the annual report that the issue is "beginning to concern us", Flanagan says: "We have become wearily accustomed to one or two self-proclaimed experts in our industry declaring publicly that, of course, Emirates could not possibly achieve consistently profitable results without some form of hidden subsidy, despite our publication of transparent audited annual accounts."
Flanagan adds: "More serious now, however, is the possible effect on governments of such ill-informed allegations, implying as they do that Emirates has an unfair advantage over other national carriers."
Source: Flight International
