Emirate Airlines Expected to Grow Capacity up to 12 percent Each Year

Dubai based Emirates Airlines is expected to grow in terms of capacity by up to 12 percent each year to the middle of the decade according to a new report compiled by analysts. The airline is currently the largest in the world when it comes to international traffic, and by 2015 is also expected to have the largest fleet of wide-body planes.

The study of Middle Eastern Megacarriers has been put together by Boston Consulting Group. In just five years, the airline has managed to introduce 32 new destinations to its itinerary, triple revenues and capacity and improve operations in terms of load factors, utilisation of aircraft and yields.

Among the 157 aircraft it has in its fleet is the largest number of Airbus A380s of any carrier and presently Emirates boasts 114 destinations around the world in some 67 countries. Boston Consulting said that other Middle Eastern airlines were likely to put in a similarly strong performance by the middle of the decade with passenger capacity predicted to triple over the coming two decades.

Middle East Partner and Managing Director for the Group, Rend Stephan, explained that the region was important for carriers travelling on long-haul journeys and that the carriers’ based there were able to tap into cost advantages which enabled them to compete aggressively with other international rivals.

According to the International Air Transport Association, Middle Eastern airlines increased capacity by 8.9 per cent in July, which was still not enough to keep up with a growth of 9.7 per cent in demand.

Kingfisher Airlines Expects New Recorded Net Profit as Growing Passenger Traffic and Increase Airfares

Kingfisher Airlines Ltd., India’s second-biggest airline by market share, expects to post its first net profit this financial year thanks to growing passenger traffic and an increase in air fares, the chief financial officer of its parent group said Tuesday.

Kingfisher has been making losses since its inception in 2005 because of an ill-timed aggressive expansion that included ordering Airbus A380s, the world’s biggest commercial jet, and a merger with budget carrier Air Deccan. This came just before the global economic crisis and hurt the company as interest and fuel costs rose while passenger traffic fell.

A turnaround in the industry is now improving the performance of airlines in India as passenger traffic has increased, giving them the opportunity to increase ticket prices.

“We have been able to increasingly pass on higher fuel costs to passengers and that is a positive sign,” Ravi Nedungadi of UB Group said.

His comment came after the airline, controlled by billionaire Vijay Mallya, late Monday narrowed its net loss for the last fiscal year ended March 31 to 10.27 billion rupees ($227 million) from 16.47 billion rupees the previous year.

Kingfisher benefited from lower lease rentals and salary costs in the past year, while higher passenger traffic drove its sales up 23% to 64.96 billion rupees from 52.71 billion rupees.

The company said its net loss would have been bigger by 251.8 million rupees, if not for an accounting standard change through which it amortized costs on aircraft maintenance and engineering.

Kingfisher’s passenger load factors grew to 81% from 72% in the previous year. It carried 12 million passengers, up 9%, while revenue per passenger increased 10% to 4,666 rupees.

Kingfisher paid 9.84 billion rupees as aircraft lease rentals in the past year, a decline of 10% due to some changes in lease contracts that allowed the carrier to push its payments forward until the end of the lease agreement, it said.

The airline’s employee costs declined 2% to 6.76 billion rupees.

“We exchanged some expatriate pilots with Indians, which led to a cut in the wage bill,” Mr. Nedungadi said.

Kingfisher also “marginally” cut the size of its workforce, he said, but didn’t elaborate.

Kingfisher spent 22.74 billion rupees to buy jet fuel in the past year, an increase of 26%. Fuel comprises the bulk of an airline’s expenditure in India.

Emirates Airlines Reported Full Year Profit Increase 51.2 percent as Premium Travelers Traffic Growth

The parent of Emirates Airline on Tuesday reported a 51.2% rise in full-year profit as the world’s largest international carrier by traffic saw business from premium travellers return to pre-crisis levels.

The Dubai-based airline shrugged off the impact of turmoil in the Middle East and North Africa as traffic through its hometown hub surged, with double-digit gains in both passenger and cargo volume.

Emirates’ rapid expansion and huge order book–at $66 billion it accounts for 10% of outstanding commercial business at Airbus and Boeing Co. (BA)–makes it a key barometer of the global airline industry.

The airline’s operating margin of 9.9% in its fiscal year to Mar. 31 topped almost every other large international airline, and the record earnings saw a four-fold rise in the bonus paid to staff to an equivalent of 12 weeks pay, pushing labor expenses up 20%

“We are fortunate to be based in the Middle East where regional passenger seats grew by 17.8% compared to a global 8.2% growth,” said Sheik Ahmed Bin Saeed Al Maktoum, chairman of the state-controlled group.

Sheik Ahmed said profit would have been AED1 billion ($272 million) higher had it not been for the increase in oil prices, with fuel expenses last week accounting for a record 43% of operating costs.

Transfer traffic through Dubai accounts for around 60% of the airline’s total business, with passenger numbers up 15% to 31.4 million over the past year, and cargo rising almost 12%.

Emirates and rivals such as Abu Dhabi-based Etihad Airways and Qatar Airways have capitalized on their geographical location to use new long-range aircraft to funnel business through their hubs.

Nigel Page, Emirates head of the Americas, said the airline has leveraged changing trade patterns to capture business, with flows to and from Africa now going through the Gulf rather than via European airports.

The Americas was Emirates’ fastest-growing region last year with revenue up 37.9% while sales in its largest geographical area of operations–east Asia and Australiasia–rose by 30.9%.

Business in the Gulf and the Middle East was still up 14.2% despite regional turmoil which saw flights to Tunisia temporarily halted, while Libyan services remain shuttered. Flights to the Ivory Coast resume on May 12.

Page said the regional problems had actually helped Dubai’s financial recovery after its own debt crisis as companies relocated staff to the emirate.

Emirates Group reported net profits of AED5.46 billion in 2010/11 compared with AED3.62 billion a year earlier, with revenue–which includes its airport and travel arms–up 29 at 53.1 billion.

The airline unit’s passenger seat factor, a key measure of capacity utilisation, rose to a record 80%, from 78.1% in the year before, with profit rising to $1.5 billion from $964 million on a 25% rise in revenue. Capacity rose 15.8%.

Emirates expect delivery of six Airbus A380s and 13 Boeing 777 planes this year, while four new routes will be added: Geneva, Copenhagen, Buenos Aires and Rio de Janeiro. It is the largest operator of both aircraft types.

Last week, Sheik Ahmed said the government-owned airline is in no hurry to sell shares to the public. He said the decision on whether to launch an initial public offering rests with the government, but ruled out any IPO in either 2011 or 2012.

Air France First European Airlines Use Airbus A380

Air France airline will conduct the first flight by using wide-body aircraft with four engines, the Airbus production. The aircraft used is the Airbus A380. The flight will cross the Atlantic to New York with 538 passengers.
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