Emirates airline, hit by soaring fuel prices, posted a loss of $ 1.1 billion

Emirates operated aircraft at Dubai International Airport in the United Arab Emirates.

Christopher Pikes | Bloomberg | Getty Images

Dubai airline reported a loss of $ 1.1 billion in the year to March, up from a $ 5.5 billion loss the previous year, despite rising aircraft fuel costs that threaten to overshadow a nascent recovery in the global aviation industry.

The world’s largest long-haul carrier said on Friday that revenue rose 91% to $ 16.1 billion, helping to reduce losses as travel locks eased from the worst of the coronavirus pandemic and the airline added capacity.

“2021-22 was largely focused on recovery after the most difficult year in our Group’s history,” said Emirates Group President and CEO Sheikh Ahmed bin Saeed Al Maktoum on Friday.

“We expect the Group to return to profitability in 2022-23 and are working hard to achieve our goals, keeping an eye on headwinds such as high fuel prices, inflation, new COVID-19 variants and the political and economic uncertainty. “

The airline had resumed flights to 140 destinations by the end of March, but soaring fuel prices, up more than 50% so far this year, continue to challenge the aviation sector affected by the pandemic. Emirates said its fuel bill more than doubled to $ 3.8 billion as the price of oil and jet fuel has soared over the past few quarters.

“It’s very difficult to tell where that price will stop or how far it might go down,” Sheikh Ahmed told CNBC in a statement. interview on Tuesday to the question about the price of fuel. “This is really affecting airline business in a big way,” she added, saying geopolitics and the Russian invasion of Ukraine are having a significant impact on fuel prices.

Emirates said fuel accounted for 23% of operating costs during the year, up from just 14% in 2020-21.

“The relatively recent reopening of major Asian markets is key to Emirates’ recovery,” Alex Macheras, an independent aviation analyst, told CNBC. “Challenges will remain with China’s lockdown continuing, fleet concerns amid Boeing 777 delays and a global cost of living crisis being more visible. [in terms of impacts] to airlines this winter. “

Path to the IPO

Emirates Group, which includes Emirates and its Dnata air services business, reported an annual loss of $ 1 billion, despite Dnata returning to profitability. The group’s revenue increased 86% to $ 18.1 billion and the group ended the year with a 30% improvement in its cash balance to $ 7 billion.

Sheikh Ahmed told CNBC that the group now plans to repay the Dubai government some of the nearly $ 4 billion in emergency aid it pumped into the airline at the height of the pandemic.

“It was money well spent,” he said. “If things continue as they are now … we can pay back what the government has injected into the company.”

It comes amid renewed speculation that Emirates or its subsidiaries could be leveraged by the Dubai government to go public, joining list of companies already allocated for the initial public offering as part of a push among regional governments to take over their state-owned public enterprises.

“I am sure that maybe in the future Emirates will be on the market and people will be able to buy the shares,” Sheikh Ahmed said. “I don’t call this point,” he added, pausing before offering further plans.

Dubai airports, the base of the Emirates, It attracted 13.6 million passengers in the first quarter, according to new data released Thursday. Dubai Airports CEO Paul Griffiths told CNBC that air passenger traffic in Dubai could reach pre-pandemic levels in 2024, a year ahead of schedule, providing a favorable wind for Emirates through the recovery.