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Saturday, May 20, 2017

Air Arabia profit down 10% to Dh103m

Dubai: Air Arabia, the Sharjah-based carrier, reported on Sunday Dh103 million in net profit for the first quarter of 2017, marking a 10 per cent drop over the Dh114 million recorded in the same period in 2016.
In a statement, Air Arabia said it posted a first-quarter turnover of Dh810 million, a 14 per cent decline over the first quarter in 2016. The airline said the decline came amid a drop in yield margins across the industry over the first three months of the year.
The profits for the first quarter, though lower year-on-year, are a turnaround from the Dh38.6 million in losses recorded by the carrier in the fourth quarter of 2016. The loss at the time came well below market expectations, with the consensus being for a fourth quarter profit of Dh57 million. Air Arabia attributed the results to challenges in the global aviation market.
In Sunday’s statement on first-quarter performance, however, the airline struck a different note, discussing confidence in growth.
Shaikh Abdullah Al Thani, chairman of Air Arabia, said the carrier continued to see strong passenger demand, and that he remained confident “of the growth prospects of the low cost travel segment in the region”.
“We believe the market economic and trading conditions are on an improving trajectory, and we are optimistic that this will reflect positively on the industry’s performance for the rest of the year,” he stated.
Average seat load factor
Air Arabia said it carried more than 2.1 million passengers between January and March 2017, in line with the number of passengers it carried in the first quarter of last year.
Its average seat load factor (or passengers carried as a percentage of available seats) during the quarter reached 81 per cent.
“The challenge for this industry is, first, the cost, which is fuel prices, and that’s a major component. The second challenge is the utilisation factor, or the load factor, so they need to watch their capacity. Another issue is the competition, currency, and prices, so those are the major issues to watch for,” said Tareq Qaqish, managing director of asset management at Menacorp.
Airlines in the region have been citing currency fluctuations as one of the challenges impacting their performance. In November 2016, Emirates reported a 75 per cent year-on-year decline in profits for the first half of the 2016-2017 financial year, and cited a stronger US dollar as a factor impacting the decline.
From an operational perspective, Air Arabia added one new route from its main hub in Sharjah in the first quarter, with flights commencing to Baku in Azerbaijan. The carrier also took delivery of one new aircraft in that period, bringing its current fleet to 47 Airbus A320 aircraft operating to 126 routes across the Middle East, Africa, Asia, and Europe.
The company hasn’t yet released its financial statement to the Dubai bourse where it is listed.

Emirates cuts flights to New York

Dubai: Emirates on Monday has announced that it will temporarily cut its daily non-stop service to New York’s JFK down to twice a day.
The Dubai-based airline currently operates three flights to JFK.
In a statement, Emirates confirmed that the changes will take from June 4 until June 20, and will resume normal operations from July 1.
“Emirates can confirm that one of its three daily non-stop flights (EK 207/208) serving the New York (JFK) – Dubai (DXB) route will be cancelled from June 04, 2017 to June 30, 2017. This flight will be re-introduced on July 01, 2017,” an Emirates spokesperson said in an emailed statement to Gulf News.
 “This decision was made as part of our routine operational review, to ensure that our capacity is deployed to best serve customer demand across our global network.
“We remain committed to New York and will continue to serve our customers on this route with 14 non-stop weekly flights during this period to JFK and 07 weekly flights to Newark.”
The temporary reduction of flights follows Emirates’ announcement in April to reduce flights to five of the 12 US cities it currently serves, which include Fort Lauderdale, Orlando, Seattle, Boston and Los Angeles.
From May 1 and May 23 respectively, Emirates’ Fort Lauderdale and Orlando operations will move from daily services to five a week. Its Seattle and Boston operations will move from twice-daily services to a daily service from June 1 and 2 respectively.
From July 1, its operations to Los Angeles will move from twice-daily to a daily service.

Emirates well placed to grow in the long term, analysts say

While Emirates is expected to continue facing challenges in the short term due to the tougher operating environment, analysts said the company was well placed to leverage its network and see long-term growth.
The group on Thursday reported Dh2.5 billion in net profit for the financial year ending in March, marking a 70 per cent drop over the previous year. Revenues for the year, however, rose marginally by 2 per cent to reach Dh94.7 billion.
During the year, Emirates Group’s cash balance decreased by 19 per cent to reach Dh19.1 billion, primarily due to the repayment of two bonds on maturity and investments into the airline’s fleet and assets.
That investment value for the year reached Dh13.7 billion, which went to new aircraft and equipment, acquisition of companies, technology and staff initiatives.
Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation, Chairman and Chief Executive of Emirates airline and Group, said these investments will strengthen the group’s resilience, and allow it to adapt to the “volatile business climate and fast changing consumer expectations.”
Dnata, Emirates Group’s aviation and travel services unit, meanwhile, reported profits that crossed Dh1.2 billion for the first time, while revenues jumped 15 per cent to reach Dh12.2 billion.
The growth was supported by new acquisitions in the US and in the Czech Republic, in addition to an increase in its shareholding of Oman United Agencies Travel in the Sultanate, according to the Emirates statement.
“Emirates and dnata will stay attuned to the events and trends that impact our business, so that we can respond quickly to opportunities and challenges. We will also progress on our digital transformation journey,” Shaikh Ahmad said.
John Strickland, director of air transport consultancy JLS Consulting, said Emirates has faced a tough year, amid multiple challenges such as travel bans and currency fluctuations. “It is clearly open to reviewing its business model whether that be its approach to on-board service or to the type of aircraft it operates, and that work is already in progress. I’d expect it to keep a tighter rein on its capacity growth in the short to medium term,” he said.
Emirates SkyCargo, meanwhile, accrued Dh10.6 billion in revenues, a 5 per cent decline over the last year, as the airfreight market remained “challenging with fast-changing demand patterns.”
Citing “strong downward trend across the industry and the weakening of major currencies against the US dollar”, Emirates said freight yield per freight tonne kilometre decreased by 8 per cent.
Saj Ahmad, chief analyst at StrategicAero Research, said the financial results show the impact of external events to a good effect.
“The recent visa issues for US travel and the electronics ban are relatively new. However, the strong dollar, price fare reductions by rivals and a low oil price have meant that margins, yield, and by extension, profits, would suffer. However, Emirates is still in the black and has a hugely robust cash balance of over $4 billion, so it is well-insulated to move forward,” he said.
No dividend
Dubai: Emirates Group said that it will not pay dividends to the Investment Corporation of Dubai (ICD) for financial year 2016-2017. ICD is Dubai’s investment vehicle that holds a stake in Emirates. This is the first time since 1996 that the group has not paid dividends to the ICD.
An Emirates spokesperson told Gulf News in an emailed statement the no-dividend policy for this year was “in line with the current business climate and to support the future investment plans of the group.”
The spokesperson said that the group paid no dividends in the initial years of the airline’s founding and in 1995-1996 for similar reasons to reinvest into the business’ future growth.

Emirates profit falls after 'turbulent year’

Dubai: Emirates airline reported on Thursday an 82 per cent year-on-year plunge in its net profits, citing “a turbulent year for aviation and travel.” Profits reached Dh1.3 billion for the financial year ended March 31, 2017.
The airline’s revenues remained stable at Dh85.1 billion during the year, as it carried 56.1 million passengers, up eight per cent over the previous year.
Commenting on Emirates’ performance, His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, tweeted: “We are very proud of our national company, which successfully reinvented the concept of travel, becoming the world’s top company in the aviation sector as millions of passengers can testify. Our national company is one of the UAE’s greatest assets and it reflects our ability to compete on the global stage in spite of all challenges.”
In a statement, Shaikh Ahmad Bin Saeed Al Maktoum, President of Dubai Civil Aviation and Chairman and CEO of Emirates airline and Group, said 2016-2017 was one of the company’s “most challenging years to date”.
“We remain optimistic for the future of our industry, although we expect the year ahead to remain challenging, with hyper competition squeezing airline yields, and volatility in many markets impacting travel flows and demand,” he said.
Shaikh Ahmad also cited “destabilising events” that impacted travel during the past year from “the Brexit vote to Europe’s immigration challenges and terror attacks, from the new policies impacting air travel into the US, to currency devaluation, and funds repatriation issues in parts to Africa.”
Policies impacting air travel into the US include the recent ban announced in late March on carry-on electronics devices from direct flights from the UAE, Qatar, Kuwait, Saudi Arabia, Egypt, Jordan and Turkey.
The US also earlier this year issued a ban blocking entry of citizens from certain Muslim-majority countries. (The executive order behind the ban has been blocked, however, by various courts in the US, but has dampened sentiment towards travelling there.)
Emirates has since announced it would introduce a service loaning tablets to US-bound First and Business Class customers.
“No matter what the remedies put in place, the bans are an added hassle factor. What is worrying is that no timeline for remedies or reduction of bans exists, and the rules for US, UK, Europe are clearly anomalous. The regional airlines’ US markets are particularly hit by the bans of restrictions …” said Peter Morris, chief economist at Ascend, a UK-based aviation consultancy.
He added that most airlines globally are finding results less profitable compared to last year as the operating environment becomes more challenging.
“Costs have risen and yield weakened. Emirates [is] no exception. Going forward, profits will be challenged further if the unstable political environment continues. This is particularly so if visa and tourism bans and restrictions impact heavily on previously-profitable markets,” Morris said.
Emirates said its passenger yield dropped in the past year to 24.7 fils due to pressure from the weakening of all major currencies against the US dollar.
The carrier said that the “relentless rise of the US dollar” against currencies in most of Emirates’ key markets had a Dh2.1 billion impact on revenues and on its bottom line.
Fuel bill
Another challenge Emirates’ chairman pointed was the “continued knock-on effect of a sluggish oil and gas industry on business confidence and travel demand.”
According to its statement, Emirates’ total operating costs increased by 8 per cent year-on-year, with fuel remaining the biggest cost component for the airline. Though average jet fuel prices fell slightly during the year, Emirates’ fuel bill increased by 6 per cent to Dh21 billion due to capacity increase. Fuel is now 25 per cent of the airline’s operating costs, compared to 26 per cent in 2015-16, Emirates said.
Revenue drivers
Meanwhile, Europe was the highest revenue-contributing region, with Dh23.9 billion in airline revenues coming from the continent, unchanged from a year earlier. East Asia and Australasia followed, with Dh22.6 billion in revenues (up 1 per cent year-on-year).
The carrier received 35 new aircraft during the year, comprising 19 Airbus A380s and 16 Boeing 777-300ERs (extended range). It also phased out 27 older aircraft, bringing Emirates’ total fleet count to 259 at the end of March 2017.

Expansion of Al Maktoum airport delayed to 2018

DUBAI: An expansion of Dubai’s Al Maktoum International Airport has been delayed by a year until 2018, the airport’s operator said on Wednesday.
Currently Dubai’s second-largest airport, it will have the capacity to handle 26 million passengers a year when the expansion is complete.
Al Maktoum airport opened in 2013 and can currently handle about seven million passengers a year. Its expansion has been delayed due to the completion of construction and to allow time for trials and testing, a spokesman for Dubai Airports said.
The Dubai government said on Sunday that it had secured $3 billion in long-term financing for expansion of its airports, which are forecast to serve 146.3 million passengers by 2025.
Al Maktoum International, located on the edge of Dubai, is being gradually ramped up to take over from Dubai International Airport, currently the world’s busiest and home to Emirates airline.
Dubai Airports’ Chief Executive Paul Griffiths told Reuters in January that budget carrier flydubai would move its operations from Dubai International to Al Maktoum International in the third quarter of this year.
Emirates airline is slated to move to Al Maktoum International in 2025.
A Dubai Airports spokesman said it aims to expand Al Maktoum further to handle 240 million passengers a year but that there was no date yet for when that would be.
This year, passenger traffic across Dubai’s two international airports is expected to reach just over 90 million in 2017, the spokesman said.

Emirates to offer in-flight iftar meals in Ramadan

The boxes contain spinach fatayer, zaatar chicken with hummus, maamoul, dates, water and laban drink

Image Credit: GN Archives

Emirates airlines aircrafts at Dubai airport.

Dubai: To provide passengers with some home comforts during Ramadan, Emirates will be offering special iftar meals to passengers of all cabin classes.
According to a statement issued by Emirates, the special meals will be available to passengers on select Emirates flights, including flights to and from the Gulf region, as well as on flights catering to Umrah groups travelling to Jeddah and Medina during Ramadan.

This year, Emirates’ iftar boxes feature an Arabesque design inspired by the region, and will provide those observing Ramadan a convenient way to break their fast with a nutritious and balanced meal.
While catering to a global palate, the iftar menus will also feature a Middle Eastern flavour. the Iftar box includes options such as za’atar chicken with hummus, spinach fatayer, halloumi cheese and cucumber sandwiches, and traditional sweets such as maamoul and dates, as well as yoghurt. Menus will be refreshed mid-Ramadan.
“Emirates utilises a unique tool to calculate the correct timings for imsak (the time to commence fasting) and iftar while in-flight,” said the airline in a statement.  
The tool calculates the exact Ramadan timings using the aircraft’s longitude, latitude and altitude; ensuring the greatest level of accuracy possible while on board. When the sun sets, the captain will inform passengers of the iftar time.
This tool was developed to supplement Emirates’ annually produced booklet on the timings for Ramadan, available on every flight.

Wednesday, November 23, 2016

Why airlines can no longer afford to insult their pilots


Why airlines can no longer afford to insult their pilots

HAS Lufthansa made a fundamental error in its treatment of its pilots? Does that question mark apply to the entire airline industry?
Flight-deck employees of the leading German airline, including its cargo arm, plan to go on strike for the 14th time since 2014, after pay talks between its pilots’ union Vereinigung Cockpit (VC) and management broke down again, writes Thelma Etim.
The unimpressed union is reportedly seeking an average annual pay rise of 3.66 per cent – in line with Lufthansa’s profits of US$5.4bn over that period.
It all sounds familiar. Just like legacy cargo carriers Cargolux and Air France-KLM, Lufthansa is struggling to competeagainst the powerful new wave of carriers fashioning a new economic and business model, whilst experiencing extraordinary growth, innovation and profitability.
They include Qatar Airways, AirBridgeCargo, Volga-Dnepr, Turkish Airlines, Etihad and Emirates – plus a raft of regional low-cost passenger carriers.

Acute shortage of pilots

Forced to downsize, Lufthansa’s approach to its pilots’ demands does not appear to be any better than counterparts Cargolux and Air France-KLM. Lufthansa’s only achievement in the negotiations thus far appears to have been the successful curtailment of the ‘negative’ press coverage of its surreptitious discussions with VC. In the face of dwindling profits, surely avoiding embarrassment (by hiding from the media) is the least of its problems.
Whether they like it or not, pilots remain the nucleus of any airline. Put simply, until the advent of pilotless commercial aircraft, no pilots, no airline.
Some airlines are already suffering from acute pilot shortages. Cargolux, for example, is currently struggling to find pilots, having revised its terms and conditions for flight-deck contracts, sources say. The Luxembourg all-cargo carrier is so short of co-pilots that flights are being delayed for several hours “or even possibly cancelled,” insiders reveal.
Former Cargolux chief executive Dirk Reich was apparently advised that the new contracts will become a major barrier to recruiting the same numbers of quality pilots as in the past. Unsurprisingly, the mood among Cargolux’s pilots is now “at an all-time low,” according to close observers.
Why else has Southwest Airlines of the USA acquiesced to a new contract which will see its pilots’ pay rise by almost 30 per cent over four years? And pilots working for Delta Air Lines are also in the process of voting on a contract offering 30 per cent pay increases. If Delta pilots approve the deal, United Airlines’ pilots will also see an augmentation in their salaries, under a clause that ties their pay rates to Delta’s, reports say.

Global, political, economic and market challenges

Pilot pay is not the only concern casting a pall over the operations of Lufthansa and other legacy carriers engaged in crucial restructuring processes to weather the constant onslaught of global, political, economic and market challenges. In July, Boeing released its seventh pilot and technician report, which forecasts that between 2016 and 2035, the world’s commercial aviation industry will require approximately 617,000 new commercial airline pilots.
Asia-Pacific is the region expected to require the greatest number of pilots (248,000) over this period due mainly to expected growth in the single-aisle low-cost carrier market, while North America’s increased pilots demand (112,000) will be the result of new markets opening up in Cuba and Mexico. Demand in Europe has increased responding to a strong intra-European Union market, the Boeing study also reveals.
RegionNew Pilots
North America112,000
Latin America51,000
Middle East58,000
Russia / CIS22,000
The projections indicate that airline pilots will find themselves in a very strong position in the very near future – even sparking bidding wars for their services. Sources suggest this is already happening, with some pilots switching from one airline to another, lured by more attractive packages and prospects.
It is a situation that will become a major stumbling block for all-cargo airline Cargolux as it comes under pressure to recruit talented new people for its proposed Henan-based offshoot Cargolux China whose launch date has already been put back. How many pilots are there who would happily uproot their family lives to live in the middle of China? How would such a change work for schooling, language, social life etc?

“..growing lack of suitable candidates”

The critical shortage of pilots amidst growing demand across the entire aviation industry is the next major headache for some carriers, especially amongst those desperately looking to cut costs. Another report warns they should be doing the opposite.
“Due to the increasing demand for pilots and a growing lack of suitable candidates, airlines need to develop strategies to ensure they attract and retain, the right crew,” asserts global risk management company Marsh, which has suggested a number of vital alternative strategies for carriers. These include conducting regular pay reviews.
“Given that the cost of flight training is considered to be a deterrent for young talented [people], they are more likely to be attracted to airlines who offer generous packages covering these costs,” the company explains. “Having then borne the pilot training costs, the airline must seek to protect its investment by taking proactive care to retain its staff.”
The Marsh report cites improving work conditions as a significant factor that carriers should consider by “taking steps to ensure their corporate culture promotes a better work/life balance” for employees.
“For example, longer rest periods, more regular schedules and revisions in the number of hours they are required to fly annually could all have positive effects,” it suggests. The truth is that most pilots try to maximise the number of hours they fly to earn lucrative bonuses worth as much as 30 to 40 per cent of their salaries.
But there remains a big gap in expectations between airline managements and their pilots. From the airlines’ current management perspective – and even though there is a shortage of pilots – airlines are unlikely to want to encourage their pilots to spend less time in the air, the report insists.
Offering enhanced employee benefits is another tactic carriers can employ to distinguish themselves from the competition. “Given the unique challenges faced by pilots, most airlines recognise they need to provide specialised aviation employee benefits coverage, as opposed to some of the more generic employee benefit packages available,” the report says.
Such niche insurance coverage typically falls into four key areas: personal accident, term-life, emergency medical expense, and loss of licence.
The report concludes that as this race for the best flight-deck talent intensifies, airlines will be forced into re-thinking their people strategies. “Given [carriers] operate within an often harsh and volatile economic environment, airlines will need to explore a variety of creative approaches to attract and retain crew, beyond simply raising salaries – certainly one approach is to put in place an aviation employee benefits programme that distinguishes one airline from its competitors.”