Half year profits at dnata, the Emirates Group travel, ground handling and catering arm, fell by 64% to $85 million following the collapse of Thomas Cook.
Thomas Cook was one of the major customers for dnata’s travel and catering businesses in the UK and meant it took a hit of almost $23 million from the liquidation in September.
The overall drop in profit at dnata compared to the same period last year when it made a one-off gain of $87 million from the disposal of a 22% stake in Hogg Robinson Group.
Dnata’s travel division, which incorporates UK brands such as Global Travel Group, Gold Medal, Travel 2, Imagine Cruising, saw revenue rise by 7% to $488 million over the same period last year with the value of total transactions pegged at $1.6 billion.
Emirates Group said: “The strong revenue contributions from its new acquisitions including Tropo in Germany, and Dunya Travel, helped offset weaker travel demand in other key travel markets, as well as the negative impact of the strong US dollar against the euro and pound sterling.”
Overall group profitability for the six months to September 30 was up by 8% year-on-year to $320 million, helped by a 9% decline in fuel prices.
However, revenue fell by 2% to $14.5 billion due to planned capacity cuts due to a 45-day closure of one of the runways at Dubai airport and unfavourable currency movements.
Emirates airline total carryings fell by 2% to 29.6 million although it saw a 7.9% increase to its hub city due to Dubai’s strong attraction as a destination. The carrier’s profits rose by 282% to $235 million despite a 3% decline in revenue to $12.9 billion as overall capacity fell by 7%.
Chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum said: “The Emirates Group delivered a steady and positive performance in the first half of 2019-20, by adapting our strategies to navigate the tough trading conditions and social-political uncertainty in many markets around the world.
“Both Emirates and dnata worked hard to minimise the impact of the planned runway renovations at DXB [Dubai airport] on our business and on our customers.
“We also kept a tight rein on controllable costs and continued to drive efficiency improvement, while ensuring that our resources were deployed nimbly to capitalise on areas of opportunity.
“The lower fuel cost was a welcome respite as we saw our fuel bill drop by 2 billion dirham compared to the same period last year. However, unfavourable currency movements wiped off approximately 1.2 billion dirham from our profits.”
He added: “The global outlook is difficult to predict, but we expect the airline and travel industry to continue facing headwinds over the next six months with stiff competition adding downward pressure on margins.
“As a group we remain focussed on developing our business, and we will continue to invest in new capabilities that empower our people, and enable us to offer even better products, services, and experiences for our customers.”