Emirates warns of tough six months ahead as profit drops

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DUBAI (Reuters) – Emirates said on Thursday it will face tough conditions over the next six months after the airline reported an 86 percent drop in first-half profit.

Higher fuel costs and unfavourable currency exchange rates eroded profits for the state-owned Middle East airline, which warned earlier this week earnings were being squeezed.

Dubai-based Emirates, one of the world’s biggest international carriers, made a net profit of 226 million dirhams ($62 million) in the six months to September 30, down from 1.7 billion dirhams a year earlier. Revenue rose 10 percent to 48.9 billion dirhams.

Chairman Sheikh Ahmed bin Saeed al-Maktoum said higher fuel costs and currency devaluations in markets, such as India, Brazil, Angola, and Iran, cost the group 4.6 billion dirhams in profit.

“The next six months will be tough,” he said in a statement.

First-half profit for Emirates Group, which also includes airport and travel services company dnata, fell 53 percent to 1.1 billion dirhams.

“We are proactively managing the myriad challenges faced by the airline and travel industry, including the relentless downward pressure on yields, and uncertain economic and political realities in our region and in other parts of the world,” Sheikh Ahmed said.

Airline operating costs rose 13 percent with fuel costs on average up 42 percent, which Emirates said was largely due to higher oil prices rather than an increase in operations.

The number of passengers carried rose by 3 percent to 30.1 million, while the amount of cargo it carried declined 1 percent to 1.3 million tonnes.

The group’s workforce shrank by around 1,400 employees, or 1 percent, which it said was largely due to natural attrition and a slower pace of recruitment.

The airline did not mention the impact of a pilot shortage which has forced it to cancel some flights this year. Reuters reported in May the airline was also facing a shortage of cabin crew, which Emirates denied.

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