xwb777
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Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:28 pm

Sir Tim Clark of Emirates has today stated on the sidelines of the Arabian Travel Market which is currently being held in Dubai that the upcoming Emirates profits won't be as good as the previous year. The airline will be announcing positive results but won't be as the previous year. Higher fuel costs and unfavrable exchange rates are having a bite on profits.

Quoting Sir Tim:
"“It has not been easy, in terms of the results,”

“We’ve managed to come ahead with positive results, although it’s not as good as it has been in the past.”

Emirates is satisfied with its current performance with the prevailing headwinds the company is facing. The airline is not growing as it used to be.


Emirates will announce its profits on Thursday 09MAY19.

Source: https://www.reuters.com/article/us-emir ... SKCN1S50N0 and https://www.reuters.com/article/emirate ... SD5N21M00U
 
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enilria
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:31 pm

Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.
 
PHLspecial
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:36 pm

enilria wrote:
Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.


What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?
 
dredgy
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:36 pm

enilria wrote:
Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.


This is somewhat true, but it’s only one factor of many. While a higher oil price sees more premium traffic to and from the region, it still directly increases the costs of operating flights so the increased revenue has to outweigh the increased cost.

Emirates is a well managed airline and despite many challenges in the last year, they’re still turning a positive result which is commendable.
 
dredgy
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:39 pm

PHLspecial wrote:
enilria wrote:
Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.


What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.
 
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enilria
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:42 pm

dredgy wrote:
PHLspecial wrote:
enilria wrote:
Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.


What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.

Not really Dubai, but UAE. Dubai has no oil to speak of at this point, but yes I always heard the argument made that EK did better with high oil because there was more money in the region for premium business traffic when oil was high. I think EK has said that.
 
dredgy
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 5:50 pm

enilria wrote:
dredgy wrote:
PHLspecial wrote:

What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.

Not really Dubai, but UAE. Dubai has no oil to speak of at this point, but yes I always heard the argument made that EK did better with high oil because there was more money in the region for premium business traffic when oil was high. I think EK has said that.


EK is on record as saying that when the oil price collapsed a couple of years back then they lost a lot of traffic from the oil industry. If oil price spikes doesn’t necessarily mean they suddenly get all that traffic back overnight . It stands to reason if the oil price is high then the Gulf economy is doing well, and if it’s low it’s not doing so well, Dubai and Qatar are the only places to have reallly successfully diversified.

That said, Emirates is trading profitably and I expect they’ll continue to do so (they traded -and profitably while funding huge growth- when oil was much more expensive than it is now). To my knowledge they’ve never operated at a loss.
 
anshabhi
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 6:10 pm

Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)
 
Blerg
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 6:16 pm

I would also add that they are facing growing competition from airlines such as Qatar, Oman Air, Turkish Airlines, Aeroflot... which are all after the same passenger type as EK. On top of that, both DOH and IST have opened brand new terminal/airport meaning overall experience has been considerably improved while DXB keeps on getting more and more crowded.
 
FriscoHeavy
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 8:37 pm

anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)


No, it’s not a publically traded company.
Whatever
 
FriscoHeavy
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Re: Emirates profits won't be good as in previous years

Mon Apr 29, 2019 8:39 pm

dredgy wrote:
PHLspecial wrote:
enilria wrote:
Wait, I thought everybody said that EK makes more money with higher oil prices because of the premium traffic bump? I suspected not.


What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.



Dubai doesn’t have oil.

Also, you can’t ‘Trade Profitably’. There is no such thing.
Do you mean remain profitable? They aren’t a traded company on the market.
Whatever
 
dredgy
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 8:46 am

FriscoHeavy wrote:
dredgy wrote:
PHLspecial wrote:

What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.



Dubai doesn’t have oil.

Also, you can’t ‘Trade Profitably’. There is no such thing.
Do you mean remain profitable? They aren’t a traded company on the market.


I misspoke a little - Dubai is the main aviation hub of the UAE which still produces a lot of oil and a gateway to the rest of the Gulf so attracts a significant amount of oil traffic. Dubai’s economy is not completely isolated from oil yet as it’s still part of the UAE and the Persian Gulf in general, both of which are still largely dependent on oil.

As for “trading profitably”, it’s a valid term that means “operating profitably”. Trading/operating are interchangeable in this context (e.g why stores have “trading hours”) though I can see where the confusion would come from - but I don’t think this is a site for discussing grammar and vocabulary. Where I’m from “traded” is the standard way of “did business”.
 
Bricktop
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 8:54 am

anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)

It's not publicly traded but if it was, I'd be a long-term short. They aren't going away by any means, but I don't think they will be what they once were.
 
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unrave
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 9:16 am

anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)

That is not how it works. Companies provide future guidance on profits all the time.
Denial of racism is as egregious as racism itself
 
Exeiowa
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 11:10 am

Well in many parts of the world there are restrictions on what maybe disclosed publicly, mostly around timing. As here we are dealing with a wholly middle east government owned entity I don't think we need to worry to much about those kinds of rules.
 
rufusmi
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 11:25 am

anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)


Emirates is government owned, not publicly traded. And Musk is still CEO, he only had to give up his chairman post on the board of directors.
 
MIflyer12
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 11:57 am

anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)


It's called earnings guidance. It's certainly allowed in the U.S. Earnings guidance is different from a change of ownership declaration - in part because the arbitrage opportunity is so much smaller.
 
anshabhi
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 1:37 pm

MIflyer12 wrote:
anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)


It's called earnings guidance. It's certainly allowed in the U.S. Earnings guidance is different from a change of ownership declaration - in part because the arbitrage opportunity is so much smaller.


Yeah but earnings guidance is something you give when you're presenting the quarterly or annual results. Not at any random event

This kind of announcement brings more suspicion for insider trading then anything else

Regularly providing such guidance is the task of brokerage houses not company management
 
ELBOB
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 1:43 pm

Consider that profit is what's left over after capital investment, fuel, salary, interest payments, leasing payments, hedging losses, failed investments, advertising, air-to-air photo shoots, event sponsorships, recruitment costs, executive parties, stationery cupboard replenishment.... and still they will have made many millions of dollars of profit through the Winter schedule. And have done so for more than ten years straight.

I just don't get how people see that as a negative.
 
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lightsaber
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 1:52 pm

anshabhi wrote:
MIflyer12 wrote:
anshabhi wrote:
Is Emirates stock traded publically anywhere? It would be a huge violation of laws if CEO is commenting on results before declaring them.
Equivalent to Elon Musk's "Taking Tesla Private at 420 tweet". (Which led to his removal as CEO of Tesla by SEC)


It's called earnings guidance. It's certainly allowed in the U.S. Earnings guidance is different from a change of ownership declaration - in part because the arbitrage opportunity is so much smaller.


Yeah but earnings guidance is something you give when you're presenting the quarterly or annual results. Not at any random event

This kind of announcement brings more suspicion for insider trading then anything else

Regularly providing such guidance is the task of brokerage houses not company management

Management must provide such guidance for loans. By prebroadcasting the truth, banks have more confidence EK knows how to manage its business. This ensures continued good loan terms.

All companies give guidance. Look at any quarterly report. EK doesn't send to the public quarterly reports, but you had better believe banks expect them, if not monthly.

I've posted since 2007 (probably earlier) that the way to defeat the ME3 is to bypass them. Direct flights always have better yield. The new IST, ADD, and expansion in India will hurt yield at the ME3. New lower cost per flight, longer range aircraft allows such bypass earlier.

We still need hubs. The yield will just drop.

Lightsaber
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StudiodeKadent
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 1:58 pm

I'm not surprised.

EK is a great airline but its fundamentally a low-margin business. EK is high-volume superconnector traffic, so its leisure-heavy. And as more airlines get more fuel-efficient P2P-oriented jets, EK's volume/economies-of-scale advantage will be less impressive.

I wouldn't say EK is "DOOOOOMED" but its fair to say that slowly and surely it will erode market share and as the A380s are replaced by the A350s and A330s they'll be able to make the transition naturally.
 
aeropix
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 2:57 pm

dredgy wrote:
EK is on record as saying that when the oil price collapsed a couple of years back then they lost a lot of traffic from the oil industry. If oil price spikes doesn’t necessarily mean they suddenly get all that traffic back overnight .


It's been the same old tune with different lyrics every year, the profit is never as high as anybody expected because:

1. "It's been a tough year full of challenges"
2. "The coming year will be a tough year full of challenges"
3. "The price of oil is / was too LOW"
4. "The price of oil is / was too HIGH"
5. "The value of the Dirham / Dollar / Ruble against other foreign currencies was too LOW"
6. "The value of the Dirham / Dollar / Ruble against other foreign currencies was too HIGH"
7. "Growth was faster / larger than last year"
8 "Growth was slower / smaller than last year"

And so on. I doubt the books will ever show a loss, nor will they ever have record-breaking bunker busting profits again, certainly. Expectations must be managed even if the shares are all privately held.
 
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spinotter
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 3:34 pm

FriscoHeavy wrote:
dredgy wrote:
PHLspecial wrote:

What is the logic behind that? I would think most business travelers would book economy because that's what a company would pay for most times. Higher oil prices means higher ticket prices but how does that translate into more profit exactly?


Because Dubai (and the Middle East in general) is where oil is from. Higher oil prices means oil companies making more money and investing more which means more staff travel. Emirates caters to a lot of that traffic, though it’s not the be all and end all.



Dubai doesn’t have oil.

Also, you can’t ‘Trade Profitably’. There is no such thing.
Do you mean remain profitable? They aren’t a traded company on the market.


The word "trade" means "buy and sell goods and services." One can buy and sell goods and services profitably, surely, as EK does?
 
worldranger
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 4:17 pm

Look for a 2.5bn-ish dhs group profit. First half was 1.1bn. Group target for profit share is 4.4bn. Not going to happen.
 
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lightsaber
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Re: Emirates profits won't be good as in previous years

Tue Apr 30, 2019 4:23 pm

StudiodeKadent wrote:
I'm not surprised.

EK is a great airline but its fundamentally a low-margin business. EK is high-volume superconnector traffic, so its leisure-heavy. And as more airlines get more fuel-efficient P2P-oriented jets, EK's volume/economies-of-scale advantage will be less impressive.

I wouldn't say EK is "DOOOOOMED" but its fair to say that slowly and surely it will erode market share and as the A380s are replaced by the A350s and A330s they'll be able to make the transition naturally.

It is rare I 100% agree with a post. EK will transition to boost profits. Dubai needs to build O&D and that is a slow process.

Competition will dilute yields. Cest la vie.

Lightsaber
IM messages to mods on warnings and bans will be ignored and nasty ones will result in a ban.
 
dredgy
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Re: Emirates profits won't be good as in previous years

Wed May 01, 2019 12:55 pm

aeropix wrote:
dredgy wrote:
EK is on record as saying that when the oil price collapsed a couple of years back then they lost a lot of traffic from the oil industry. If oil price spikes doesn’t necessarily mean they suddenly get all that traffic back overnight .


It's been the same old tune with different lyrics every year, the profit is never as high as anybody expected because:.


Yes, they're out of high growth stage, that's for sure. But they're a sustainable business with a very well proven track record of posting profits. Emirates operates in a global environment and is affected - significantly - by political, natural or other problems in many countries and despite this, they've managed to grow by passenger numbers & revenue essentially every year for the last 20+ years and been profitable to boot.

Sure they might have plateaued, but there's nothing inherently wrong with that - they're still keeping relevant & making money (even half of last year's profit is not a bad year). Their growth has been organic & debt-fuelled, so they don't need to demonstrate high growth potential to court investors. Their might be issues with their hub model in the long term (with things like Project Sunrise) but they've constantly shown an ability to adapt, and will do so again - more fifth freedom flights from Europe is one such area where they've identified they can make money. Knowing Tim Clark, they have contingency upon contingency and so long as they retain the ability to adapt quickly, they'll continue to do well.

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