UPDATE 2-Emirates defies aviation gloom to double profit

Mon Nov 12, 2012 6:37am EST

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By Praveen Menon

DUBAI, Nov 12 (Reuters) - Emirates, Dubai's flagship carrier, doubled its first-half profit, carried more passengers and surged ahead with its growth plans, leaving its struggling European and Asian rivals trailing.

The government-owned airline, along with other state-backed Gulf carriers Qatar Airways and Etihad Airways, has invested in new routes as European airlines, hit by high fuel costs and a global market slowdown, cut costs and shelve growth plans.

Emirates and its home base Dubai are betting that its location - a third of the world's population is within a 4-hour flight radius - will continue to attract passenger traffic away from other global hubs such as London, New York and Singapore.

"Unlike its European rivals Emirates benefits from the pivotal geographic location of Dubai relative to the world's growing markets," said John Strickland, director of UK-based JLS Consulting.

"Its purpose built Dubai hub is also unconstrained compared to those in Europe and this provides Emirates with the critical mass to be able to offer thousands of itinerary choices which result in its high sustained load factors."

Emirates said net profit was 1.7 billion dirhams ($462.8 million) in the six months to Sept. 30 compared with 836 million in the same period a year ago.

International Airlines Group, the owner of British Airways and a competitor to Emirates, posted a 96 percent drop in its 9-month profit on Friday and said it would axe almost a quarter of its Spanish airline Iberia workforce.

European rival Deutsche Lufthansa unveiled a cost cutting drive in October while Asian giant Singapore Airlines also saw profits drop in the second quarter.

Emirates entered a 10-year alliance with Qantas Airways in September, as it looked to compete with Abu Dhabi's Etihad Airways for a share of Australia's market.

It has launched 15 new destination since Sept last year.

Emirates has carried 18.7 million passengers since April 1, up 15.4 percent from a year ago. Revenue was 35.4 billion dirhams, up 17 percent on the same period last year.

High fuel costs accounted for 39 percent of expenditure, Sheikh Ahmed bin Saeed Al Maktoum, the chairman and chief executive of Emirates said in a statement.

Profits for the wider Emirates Group, including airline services arm Dnata, was 2.1 billion dirhams, up from 1.3 billion dirhams a year earlier.

Cash assets fell to 15.2 billion dirhams after the airline repaid a 2 billion dirham sukuk, or Islamic bond in June.

ENGINE FAULT

The airline said in a separate emailed response that it was investigating the cause of an engine fault which resulted in an A380 Emirates jet bound for Dubai being forced to return to Australia on Sunday night but gave no further comment.

Emirates' President Tim Clark said last week that Emirates would consider replacing its planned fleet of 175 Boeing 777s with a new version of the plane if it meets all the airline's needs.

Middle Eastern carriers gained market share during the first eight months of the year, with passenger traffic rising 17.1 percent and cargo demand increasing 14 percent from a year ago, IATA said in September.

Emirates said on Monday that passenger traffic, measured in revenue passenger kilometres, was up 17.8 percent in the six months to Sept. 30, with passenger seat factor averaging 80 per cent, slightly above last year's 79 percent. ($1=3.6730 UAE dirhams) (Editing by Amran Abocar and Mike Nesbit)

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