DUBAI (Reuters) – Dubai’s flagship carrier Emirates reported a 72-percent drop in 2011 profits on Thursday as soaring fuel prices accounted for nearly half of the Gulf carrier’s costs.
Emirates, among the top 10 in the world by passenger numbers, had profit of 1.5 billion dirhams ($409 million) for the fiscal year ended March 31, compared to profit of 5.4 billion dirhams in 2010.
Revenue at the Dubai government-owned airline was 62.3 billion dirhams in 2011, up 14.9 percent.
The airline’s fuel bill rose 44.4 percent in the 2011/2012 financial year to 24.3 billion dirhams, or 40 percent of total costs, it said.
The Arab world’s largest airline said in March that it may revive its fuel hedging program to help guard against soaring costs.
“In addition to the cost of fuel, Emirates had an operationally challenging year with the political unrest across the Middle East and North Africa affecting flight schedules,” the airline said in a statement on Thursday.
Rising fuel costs and the financial turmoil in Europe are expected to impact earnings of most global carriers, the International Air Transport Association said last month.
The airline’s passenger seat factor was 80 percent, in line with the prior year.
Profits for the wider Emirates Group was 2.3 billion dirhams, including airline services arm, Dnata. Emirates paid a 500 million dirham dividend to the Dubai government while Dnata paid 350 million dirhams. In 2010, Emirates’ dividend payout was 2.3 billion dirhams.
Dubai has long touted its position as a travel hub and rapidly expanded its Emirates airline.
The airline is the world’s largest customer of the Airbus A380 superjumbo. It ordered 90 A380 aircraft in 2010, with about 70 yet to be delivered.
It is competing with Abu Dhabi’s Etihad Airways and Qatar Airways, as the state-backed carriers look to transform the Gulf region into the new hub for global aviation.
Emirates’ drop in profits is in line with its competitors like Air France-KLM, German flagship airline Deutsche Lufthansa and Cathay Pacific.
Air France-KLM’s first-quarter losses widened and Cathay posted a 61 percent drop in 2011 profit — both hit by high fuel costs and the slowing global economy.