Emirates is in talks to acquire Etihad.
A higher oil price that once spurred earnings at UAE airline Emirates by encouraging local travel has become a burden, sending first-half earnings tumbling.
Net income at Dubai-based Emirates Group dropped by more than half in the six months through Sept. 30, with pressure from surging crude compounded by negative currency swings in markets including India, Brazil, Angola and Iran, the company said Thursday.
The world’s largest long-haul airline is particularly sensitive to oil-price fluctuations. Too low and demand in the energy-rich Arabian Gulf dries up, too high and the increased bill for jet fuel wipes out any benefits. Emirates earnings rose by two-thirds in fiscal 2018 with oil at an average $57.83 a barrel. The average for the first half this year was $75.40. The Organization of Petroleum Exporting Countries is meanwhile considering new cuts to output, which would lead to a further jump in prices. The next six months “will be tough,” Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum warned, with the Middle East also facing “uncertain economic and political realities” and global air fares buffeted by “relentless downward pressure.”
First-half net income dropped 53 percent to 1.1 billion dirhams ($296 million). The airline operation suffered an 86 percent decline, with group figures improved by receipts from a disposal at ground-handler Dnata. To see the Emirates statement click here. The airline has yet to break an an impasse with Rolls-Royce Holdings Plc over the supply of engines for a new batch of double-decker Airbus SE A380s. Talks center on the performance and price of the turbines.
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