The Emirates Group released its 2022-2023 Annual Report last week, announcing its most profitable year ever, supported by strong demand across its operations. Emirates posted record new profits, fully recovering from last year's loss position.
Emirates and dnata saw significant revenue growth in 2022-2023 as the group expands its air freight and travel-related operations following the lifting of worldwide pandemic-related restrictions.
For the fiscal year ending March 31, 2023, the Emirates Group posted record profits of $1 billion, compared to a loss of $3 billion last year. The group's revenue totaled $81 billion, an 32,6 percent increase over last year's results. The Group's cash balance reached an all-time high of $65 billion, up 11,6% year-on-year, driven by strong demand across its core business units and markets.
Sheikh Ahmed bin Said Al Maktoum, Chairman and Chief Executive Officer of Emirates Airline and Group, said: “We are proud of our 2022-23 performance. Not only did we fully recover, we achieved a record-breaking result. We would not have achieved this without Sheikh Mohammed bin Rashid Al Maktoum, UAE Prime Minister and Deputy President and Emir of Dubai, whose leadership has been critical to our continued success over the years. Sheikh Mohammed, the architect of Dubai's progressive economic policies, is also the engine of the Emirates Group's path. Without his dedication and support, Emirates would only have reached half its current size.”
Sheikh Ahmed continued: “I am proud of the 2022-2023 performance of the Emirates Group and our contribution to restoring air transport and tourism in the markets we serve. In this context, Dubai achieved a tremendous increase in international visitors by 2022 percent in 97 compared to last year. The group is the largest actor in the UAE aviation industry, supporting more than 770 thousand jobs and is estimated to contribute over $47 billion to GDP. With our growth plans and in line with Dubai Economic Agenda D33, we expect to significantly increase our contribution to the UAE's GDP over the next decade through direct and indirect employment, supply chain spending, tourism spending and trade advantage gained from cargo movement."
Sheikh Ahmed also evaluated the group's recovery performance in 2022-2023: “We envisioned a strong return in travel demand and were ready to expand our operations quickly and safely once the recent travel restrictions were lifted and triggered the demand wave. Our continued investments in our brand, products and services have helped drive passenger preference and position us positively in the market. As a result, we achieved record financial performance and cash balance in our 2022-2023 fiscal year. This situation; It reflects the strength of our business model, our careful forward planning, the hard work of all our employees, and our solid partnerships in the aviation and travel ecosystem.
To support the expanded operations and strengthen the group's capacity going forward, Emirates and dnata accelerated their worldwide recruitment efforts throughout the year. As a result, the group's total workforce, representing more than 160 nationalities, increased 20 percent to 102.379 employees.
In 2022-2023, the group invested $2 billion in new aircraft, facilities, equipment, companies and cutting-edge technologies to position its operations for future growth. Commitments include a massive multi-billion-dollar aircraft cabin refurbishment program; 5 new 777 cargo plane orders; construction of a new pilot training centre; Opening of the world's largest vertical farm, Bustanica, in Dubai as part of the partnership with CropOne; New trainer aircraft for students at Emirates Pilot Training Academy; dnata's acquisition of a 100 percent stake to take 30 percent ownership of ground handling operations in Brazil and construction of a new advanced cargo facility in Erbil, Iraq.
The Emirates Group also continued to make progress on its sustainability journey throughout the year. In particular, it signed the United Nations Global Compact, a voluntary initiative by which Emirates and dnata will work to make the UN Sustainable Development Goals and Principles part of their strategy, culture and operations. The group has also signed the UAE Gender Balance Council's commitment to increase female representation in middle-to-top management positions nationwide to 2025 percent by 30.
Among Emirates' many environmental initiatives is the Boeing 777's successful demonstration flight with 100 percent sustainable aviation fuel (SAF) in its single engine. The initiative, a first in the region, contributes to the industry's collective data and efforts to enable a future where flights are operated with 100 percent SAF. In line with its goal of reducing its carbon footprint by 2030 percent by 50, dnata has committed to invest $2022 million over a 23-year period in 2-100 to increase environmental efficiency in its global operations.
During the year, the group supported various community and humanitarian initiatives in its markets, including relief efforts for the floods in Pakistan and the earthquake in Turkey and Syria. It also continued to participate in innovation development centers and support programs that align with skilled talent in aerospace and develop future-proof solutions for the industry.
Sheikh Ahmed said: “In the 2022-2023 period, we have demonstrated our agility and skill by not only bringing back most of our flights, but also expanding our footprint and capacity by investing in people, products and new technologies. Continuing to lay strong foundations for future success; We are joining forces with our business partners to expand our operations and collaborate on innovative solutions in the fields of travel and aviation. As our operations expand, so does our ability to make a positive impact on the communities we serve. We are committed to our goal of minimizing our environmental impact while delivering value to our customers and stakeholders.
“We enter 2023-2024 with a strong positive outlook and expect the Group to continue to make profits. We are working hard to meet our targets by closely monitoring inflation, high fuel prices and political/economic uncertainty.”
Emirates' performance
Emirates' total passenger and cargo capacity reaches 2022 billion ATKM, an increase of 2023 percent in 32-48,2, while the airline continues to restart passenger services across its network in line with the lifting of travel restrictions related to the pandemic.
In addition to launching flights to Tel Aviv, Emirates restarted flights to six destinations and increased services to 62 cities in its network to meet strong passenger demand throughout the year. As of March 31, 2023, the Emirates network has 150 destinations on six continents, 9 of which are served by a fleet of cargo aircraft only.
Emirates launched its flagship A380 aircraft to more cities during the year, reaching 380 destinations on the A31 network as of March 2023, 43.
Providing its passengers with access to more destinations, Emirates signed new codeshare agreements with United Airlines and Air Canada in 2022-23, adding more than 200 new destinations to the airline's connection capacity in the Americas, in addition to the mutual passenger program advantages. Emirates also consolidated strategic partnerships with Qantas and flydubai and signed new partnerships: Airlink, AEGEAN, ITA Airways, Air Tanzania, Bamboo Airways, Batik Air, Philippine Airlines, Royal Air Maroc and Sky Express.
Emirates took delivery of two new 777 cargo aircraft during the financial year. The airline has also phased out 2 legacy aircraft consisting of 380 A1s, 777 Boeing 300-1ER and 4 Cargo Aircraft. As of the end of March, the company's fleet totaled 9,1 aircraft with a young average age of 260. Emirates also has 200 aircraft on order. Among these, there is an order for 2022 Boeing 2023-5ER cargo planes announced in 777-300.
With significantly enhanced capacity in most markets, Emirates' total revenue for the fiscal year increased 81 percent to $29,3 billion. Currency fluctuations in some important markets of the company, especially the Euro, Pound Sterling, and the devaluation of the Pakistani Rupee negatively affected the profitability of the company by 1,2 billion dollars.
Total operating cost increased 57 percent compared to last fiscal year. In 2022-2023, the airline's two major cost components were cost of ownership and cost of fuel, followed by cost of employees. Fuel accounted for 2021 percent of operating costs compared to 22 percent in 23-36. The airline's fuel bill increased by 49 percent compared to the previous year to $48 billion, due to 143 percent higher consumption in parallel with capacity expansion and a 9,2 percent increase in average fuel prices.
With the removal of pandemic-related travel restrictions worldwide, the airline significantly improved its financial results, posting a record profit of $1,1 billion after last year's loss of $2,9 billion and a profit margin of 9,9 percent, the best performance in its history.
Emirates carried 2022 million passengers in 2023-78, increasing seat capacity by 43,6 percent (a 123% increase). The airline also continued to invest in furthering the passenger experience. Emirates has received a lot of positive passenger feedback by launching the full Premium Economy experience during the year, commissioning the first six of its A380 aircraft with a completely redesigned cabin interior, and opening the modern concept retail store “Emirates World”, which will be rolled out gradually in other key markets. It also announced that it will invest $350 million in next-generation inflight entertainment systems for its A350 fleet.
Continuing to focus on digital initiatives to provide passengers with fast and safe journeys, Emirates signed a key biometric data agreement with the Directorate General of Residence and Foreigners Affairs in Dubai to speed up post-arrival transactions for passengers.
Emirates SkyCargo performed strongly, contributing 16 percent of airline revenues as aircraft converted to “mini cargo planes” during the pandemic returned to passenger flights at full capacity, despite the reduction in available capacity.
In 2022-2023, Emirates' cargo division consolidated its leadership in cold chain transport, with its advanced expertise and infrastructure making it the institution of choice for the transport of temperature sensitive drugs and other perishable goods during the pandemic.
Emirates SkyCargo has maintained its dominance in the global air transport industry by focusing on its customers, offering innovative solutions to the market, and leveraging its fleet and network capacity. The cargo division signed commercial memorandums of understanding with United Airlines and Air Canada during the year, expanding the scope and capacity of its flight network offered to its customers; Launched a new digital channel called WebCargo for customers to directly access and book flights related to cargo shipments and expanded its e-commerce transport solution Emirates Delivers UK to include UAE customers.
Emirates SkyCargo also leveraged its expertise and capacity to transport relief supplies to Pakistan, Turkey and Syria in partnership with Dubai International Humanitarian City.
With stable air freight demand throughout the year, Emirates' cargo division posted strong revenues of $4,7 billion. There was a 21 percent drop compared to the exceptional performance caused by the pandemic last year.
Transport return per Freight Ton Kilometer (FTKM) increased by 3 percent despite the return of more cargo capacity to the global market, but remained high compared to the pandemic market overall, thanks to stable and strong demand.
Cargo capacity fell 14 percent to 1,8 million tonnes, driven by reduced full-year cargo capacity as more passenger service resumed. By the end of 2022-2023, Emirates SkyCargo's total freighter fleet remained stable with 11 Boeing 777F aircraft.
Emirates' hotel portfolio revenue for the past year increased by 12 percent to $184 million, reflecting the rise in tourism traffic, especially in Dubai.
In the face of rising interest rates, Emirates has skillfully managed its net risk and effectively mitigated the impact of price fluctuations on the bottom line. Additionally, the proactive currency risk management program has provided continued financial stability and resilience by leveraging a range of financial hedging strategies, including futures contracts and natural hedges.
Emirates closed the fiscal year with $31 billion in cash assets, an increase of 2022 percent compared to March 79, 10,2.
dnata's performance
The effects of the post-pandemic recovery were felt in almost all dnata activities, and dnata increased its profits by 2022 percent to $2023 million in 201-90.
With increased worldwide flight and travel activity, dnata's total revenue was $74 billion, up 4,1 percent. dnata's international activities account for 10 percent of its revenues, up 72 percent compared to last year. Throughout the year, dnata worked closely with customers in key markets such as the UK, USA, Europe and Australia, despite challenges such as labor shortages and rising inflation.
Laying the foundations of future growth, dnata's investments in 2022-2023 reached 127 million dollars. Significant investments made throughout the year include the new cargo hub in Amsterdam, the Netherlands; New modern cargo and ground handling equipment facilities in Erbil, Iraq; worldwide launch of the advanced “OneCargo” system to digitize and automate business units; This includes the expansion of marhaba operations in Dubai and Zanzibar, and the reopening of refurbished catering facilities in Sydney with energy efficiency installations and state-of-the-art equipment.
In 2022-2023, dnata's operating expenses were $74 billion, up 4 percent, in line with the expansion of operations in its Airport Operations, Catering and Travel divisions worldwide, and the impact of inflationary pressures across all markets, primarily labor and food supply.
dnata's cash balance rose to $1,4 billion. Net cash flow used in financing activities, mainly loan and leasing payments, was $247 million, while the company used $144 million in net cash for its core investment activities. The company posted a positive operating cash flow of $2022 million in 2023-381, reflecting significant growth in revenues.
dnata's revenue from Airport Operations, including ground and cargo services, rose to $2 billion.
The number of aircraft loading and unloading operations carried out by dnata worldwide increased by 35 percent to 712.383, while cargo carrying capacity decreased by 8 percent to 2,7 million tons. These results reflect the increase in flight activity in all markets as the recent pandemic restrictions are lifted and dnata customers restart flights.
In 2022-2023, dnata launched ground handling operations with Emirates Leisure Retail (ELR) and MMI as the main concessionaire for all food and beverage, duty free and commercial stores at the newly built terminal at Zanzibar Abeid Amani Karume International Airport. It also expanded its operations in Canada by partnering with GTA Group to provide quality and secure cargo services in Calgary and Vancouver.
dnata's Catering and Travel Services business grew 187% to generate $1,3 million of dnata's revenues. In-flight catering operations, on the other hand, brought 111,4 million meals to airline passengers, almost tripling over last year as airline passengers worldwide resumed flight operations.
dnata's Catering and Travel Services division has significantly increased production to help airlines resume post-pandemic flights, particularly in Australia and key UK and US markets. It also worked extensively with travelers to create flexibility in menus to address supply chain issues and food inflation.
In the UAE, dnata subsidiary Alpha Flight Services (Alpha) has signed a concession agreement at Ras Al Khaimah International Airport where it will provide in-flight catering services to more than 10 airlines, operate food and beverage stores and an airport lounge.
Highlights from the lucrative contracts signed by the catering division in 2022-2023: Multi-year catering contracts with Australia's newest airline Bonza and Air India for flights to London, Birmingham and Milan; Contracts with United Airlines and Edelweiss Air for flights to Jordan, and contracts with Lufthansa and Swiss International Air Lines in Singapore.
Revenue from dnata's Travel Services division increased 227 percent to $618 million. The total transaction value (TTV) of travel services sold increased by 203 percent to $1,9 million, a significant growth compared to last year. This increase reflects the company's recovery after COVID-19-related booking cancellations last year.
In 2022-2023, dnata Representative Services expanded its existing passenger services support for Lufthansa in Europe and expanded its relationship with the airline by providing a range of sales and marketing services to American Airlines as its general sales representative in India. dnata has become the Middle East's preferred travel partner of American Express Global Business Travel, the world's leading B2B travel platform, reinforcing its long-term partnership with Club Med to offer tailor-made, all-inclusive holidays to GCC passengers at special prices. .
dnata has expanded its travel services sales footprint in the UAE with the opening of its new travel store in Dubai Hills. In a sign of increasing visitor numbers and demand for Dubai experiences, Arabian Adventures has expanded and enhanced the popular “One Night Stay Safari” experience in the Dubai Desert Wildlife Sanctuary and relaunched an enhanced version of its signature Jeep Adventure Safari.
dnata's holiday sales specialist, Yalago, expanded its global domestic market teams and achieved a 2022 percent increase in hotel bookings in 92 compared to last year.