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Dnata travel division revenues rise but Emirates airline suffers 86% profits slump

Dnata’s travel division contributed $456 million to parent group Emirates revenue in the first half of 2018-19.

This represented a rise of 9% over the same period last year.

The division’s underlying net sales increased by 6% to $1.6 billion.

“This performance was driven by strong results from the travel division’s UAE operations, revenue contributions from Destination Asia which dnata acquired in September 2017, and healthy business in UK which was also boosted by a stronger pound sterling against the US dollar,“ the Dubai-based group said today.

“At the end of September, dnata entered the German market with its acquisition of Tropo, a tour operator specialising in travel packages, last minute holidays and hotel reservations.”

Overall dnata profits rose by 31% to $235 million, helped by a one-off gain by selling its 22% stake in Hogg Robinson Group as part of the acquisition of HRG by American Express Travel Business Group. Without this, profit would have dropped by 18%.

However, Emirates group profits fell by 53% in the first six months of its 2018-19 financial year to $296 million.

Emirates airline suffered an 86% profits slump to $62 million despite passenger carryings growing by 3% to 30.1 million.

“The profit erosion was primarily due to the significant increase in fuel prices of 37% compared to the same period last year, as well as the negative impact of currencies in certain markets,” the company said.

The drop came even though group revenue rose by 10% to $14.8 billion year-on-year.

Group chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum, said: “Emirates and dnata grew steadily in the first half of 2018-19.

“Demand for our high quality products and services remained healthy, as we won new and return customers across our businesses and this is reflected in our revenue performance.

“However, the high fuel cost as well as currency devaluations in markets like India, Brazil, Angola and Iran, wiped approximately AED 4.6 billion from our profits.

“We are proactively managing the myriad challenges faced by the airline and travel industry, including the relentless downward pressure on yields, and uncertain economic and political realities in our region and in other parts of the world.

“We are keeping a tight rein on controllable costs and will continue to drive efficiency improvement through the implementation of new technology and business processes.”

He warned: “The next six months will be tough, but the Emirates Group’s foundations remain strong.

“I’m pleased to note that our home and hub in Dubai continues to attract travel demand, as the airline saw 9% more customers enjoying Dubai as a destination in the first half of 2018-19 compared to the same period last year.

“We expect this demand to remain healthy as new attractions come online and the city gears up for Dubai Expo 2020.

“Moving forward we are firmly focussed on sustaining our business. We will do this by being agile to capitalise on opportunities, and investing to serve our customers even better with high quality products that they value.”

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