November 9, 2017 / 10:26 AM / 2 months ago

Emirates H1 profit surges as passenger demand outpaces capacity growth

DUBAI (Reuters) - Emirates [EMIRA.UL], the Middle East’s largest airline, said on Thursday it more than doubled its first-half net profit as it tightly controlled capacity growth and filled more seats.

Airline profit increased to 1.7 billion dirham ($462.85 million) in the six months to Sept. 30, up from 786 million dirham a year earlier, the Dubai-based airline said in a statement.

Better currency exchange rates against the dollar helped boost profit, but Emirates Chairman Sheikh Ahmed bin Saeed al-Maktoum cautioned competition and higher oil prices were putting pressure on profit even as demand outpaced capacity growth.

“We still face weak economic and uncertain political realities in many parts of the world,” he said in the statement.

Emirates has cut capacity to the United States this year, blaming travel restrictions imposed by President Donald Trump’s administration for a drop in demand.

Trump’s attempt to ban citizens from some Middle East countries from visiting the United States largely affected airlines operating in Muslim-majority countries.

The U.S. also enforced tighter security on flights from the Middle East, including from Emirates’ Dubai hub.

Emirates President Tim Clark said in September the airline could restore those dropped flights in six to nine months.

Airline revenue increased 6 percent to 44.5 billion dirhams, as passenger numbers rose 4 percent to 29.2 million.

FILE PHOTO: Emirates aircraft are seen at Dubai International Airport, United Arab Emirates May 10, 2016. REUTERS/Ashraf Mohammad/File Photo

Operating costs rose 4 percent, with fuel costs up 14 percent, mainly because of higher oil prices.

Profit for the wider Emirates Group, which includes airline and airport services arm Dnata, rose 77 percent to 2.3 billion dirham.

The workforce has decreased by 3 percent since March 31. Emirates said it had slowed hiring and that attrition was the main reason 3,077 employees left.

Revenue increased 6 percent to 49.4 billion dirham.

Thursday’s results mark a return to profit growth, after the airline reported a year ago that half-year profit declined and in May posted its first drop in full-year profit in five years.

Emirates is close to ordering more than 30 Airbus A380s at the Dubai Airshow next year, sources told Reuters on Thursday, adding to the 142 superjumbos it has already ordered.

Emirates and budget carrier flydubai agreed in July to expand their commercial relationship, and have since announced dozens of new codeshares as they look to feed each other passengers.

Both airlines are owned by the government of Dubai.

($1 = 3.6729 UAE dirham)

Reporting by Alexander Cornwell; editing by Jason Neely, Larry King

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