Emirates sets new profit record at $762 million

PRESS RELEASE
April 29, 2006

The Emirates Group has announced another record performance with net profits of Dhs 2.8 billion (US $762 million) for the financial year ended 31st March 2006 - up five per cent from the previous year's record profits of Dhs 2.7 billion ($726 million). Group revenue increased by an impressive Dhs 5.2 billion ($1.4 billion) or 27 per cent, to Dhs 4.3 billion ($6.6 billion) compared to Dhs 19.1 billion ($5.2billion) last year. The Group's cash balance was a robust Dhs 11 billion ($3 billion) at the end of March, an improvement of 28.6 per cent against a year earlier.

For 2005-06 Emirates will pay an increased dividend of Dhs 386 million ($105 million) to its owner, the Government of Dubai, compared to Dhs 368 million ($100 million) last year. In total, the ownership will have received Dhs 1.4billion ($396 million) from Emirates since the financial year 2000-01.

The 2005-06 Annual Report of the Emirates Group - comprising Emirates Airline, Dnata and subsidiary companies - was released in Dubai today at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group.

The Group's sharp sales growth and record returns reflect customers' increasing preference for its products, as illustrated by the two million more passengers who flew Emirates in the latest financial year, for a new record total of 14.5 million.

Sheikh Ahmed said: "These results clearly show that Emirates' customer-oriented approach and investments in providing a quality product - the best aircraft that money can buy, top-flight service and travel experience at a competitive price - has paid off in terms of retaining and winning new customers globally."

He continued: "It has been another tough year with pressure from fuel costs continuously dampening our robust net income production. Emirates has returned its 18th consecutive annual profit, and we are pleased to have achieved this solid performance while expanding our operations in an increasingly competitive environment."

Across the Group, initiatives to improve efficiency and keep a tight rein on costs have also contributed to the positive results, as the Group maintained a strong net profit margin of 11.8 per cent.

Fuel costs remained the top expenditure accounting for 27.2 per cent of total operating costs, up from 21.4 per cent the previous year. Like other airlines, Emirates was forced to increase fuel surcharges on tickets, which only covered 41 per cent of incremental costs.

The airline's jet fuel risk management programme helped mitigate fuel costs, saving the company $189 million in 2005-06, 50 per cent more than last year. The outlook however, remains sombre in a volatile global market where oil prices have hit new highs.

In his opening review in the 2005-06 Annual Report, Sheikh Ahmed debunked accusations that Emirates receives hidden government support and subsidies, reiterating that the company's success is based on a sound and simple business model, which focuses on growth and investing in innovations to keep ahead of the competition.

He also remarked on the catalystic relationship between the transformation of Dubai into a world-class centre for business, tourism and transport, and the explosive growth of Emirates and Dnata to become world-beating companies.

"Profitability through growth seems to have become a theme of Emirates for the past decade," he said. "I must stress that we have never set out to be a threat to any other airline. We have simply concentrated on trying to provide a superb service for our passengers and cargo customers."

Sheikh Ahmed concluded: "We are gratified by the strong financial results of the Group and intend to re-invest the retained profits into acquiring advanced equipment and facilities, hiring and training the best people for our business, and putting in place superior support services - thus keeping the airline, Dnata and group subsidiary companies competitive, while providing our customers with the high quality services they have come to expect from us."