While all airline earnings are affected by the price of crude, the Persian Gulf giant is particularly sensitive to fluctuations.
Emirates Group, owner of the world’s biggest long-haul airline, suffered a 44% decline in annual earnings as higher oil prices, a stronger dollar and lower occupancy levels hit margins at a time when the Dubai-based company faces increasing competition from rivals.
While all airline earnings are affected by the price of crude, the Persian Gulf giant is particularly sensitive to fluctuations. Too high, and rising fuel costs become difficult to manage, too low and demand for travel falls in the region's oil-based economies. The carrier said last week that the sweet spot is between $50 to $60 a barrel, compared with the current level of about $70.
The double-decker plane’s unrivaled capacity has been a keystone of the super-hub model that’s helped Emirates dominate inter-continental flying, though the main airline unit has recently found it tough to find viable new destinations as rivals fight back with more direct flights, and saw full-year profit fall 69%.
Demand for airfreight also ebbed, Emirates said. The Dnata ground-handling arm, by contrast, posted record earnings of 1.4 billion dirhams, aided by gains from a disposal.