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Low Oil Prices, Terror Concerns Forces Emirates Profit To Tumble 70%


05/12/2017


Low Oil Prices, Terror Concerns Forces Emirates Profit To Tumble 70%
Due to the weighing down of the Persian Gulf economies because of the drastic fall in the global price of crude oil since the last few years and as people have been more discouraged from travelling due to terrorist attacks, Emirates Group, operator of the world’s biggest long-haul airline, posted its first decline in annual profit for five years.
 
The Dubai-based Emirates said in a statement that as revenue grew 2 percent to 94.7 billion dirhams, the net income for the 12 months ending March 31 tumbled 70 percent to 2.5 billion dirhams ($681 million).
 
Over the last 30 years of its history of operations, Emirates become an industry heavyweight by exploiting the position of the Gulf at a natural global crossroads and over the last few years, the company has been grappling with some of the toughest operating conditions in a 30-year history and therefore this slump was partially expected by some analysts. A ban on in-cabin laptops on American flights that’s prompted it to rein in U.S. capacity and a stronger dollar has added ot the woes of the carrier. 
 
“We expect the year ahead to remain challenging with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” Chairman Sheikh Ahmed bin Saeed Al Maktoum said in the statement.
 
The demand for premium travel in a region at the center of world oil and gas production, has been dampened by the regularly dropping price of crude oil and this drop represents a negative for Emirates and its Gulf peers while this the low price of crude has been a boon for most other airlines. There has been a significant slump in visits to Europe by Asian tourists as terrorist attacks ranging from France to Turkey and North Africa have also put some people off traveling.
 
A significant drop in the rate of occupancy for planes that usually fly more than 80 percent full had been noted after the ban on in-flight access to large electronic devices by the U.S. government along with President Donald Trump’s moves to limit U.S. access from countries including the United Arab Emirates. According to President Tim Clark, redeploying of aircraft to destinations in Malaysia, Oceania and Africa has been forced after the woes for U.S. targeted flights had prompted the carrier to eliminate 25 weekly flights to the U.S.
 
Because of the dirham’s peg to the greenback, the strengthening of the U.S. dollar, which has reduced the value of receipts booked in a host of weaker currencies, Emirates and its earnings has also suffered.
 
(Source:www.bloomberg.com)