SAA - the bottomless pit
Paxing All Over The World
Fair enough Deskjockey, let me put it another way.
I agree that it is not just about the aircraft. It is about the whole company and the way they behave. My point is that that kind of behaviour CAN NOT be changed. I look at BA and see how, despite the privatisation, they still have the big overheads and numerous bodies living in the corporate HQ (known as Waterworld) at EGLL. Tehir staff are still being told to make more savings and the bosses are still raking in bigger bonus'. Sound familiar?
The Ford Motor Company will also have these historical collections of people and practices that prevent it from competing with Kia.
So - how do you get rid of the history? That only happens when the company is either bought by a commercial competitor or goes bankrupt and the remnants are bought by a comemrcial competitor. The chances of any organisation/company/government changing it's spots is almost zero. That is why I say that SAA cannot change and can never compete - because it is subject to the history of the humans inside it and the history of the company.
Even if SAA were nationalised today and threw out tons of the history and cabins full of the staff at HQ - they would still not be competitive. Only a brand new organisation can be so.
In due course, RyanAir will grow to the point where it wlll not be so competitive - No matter what the mgmt of today might chant! An example? Virgin Atlantic Airways was the brash new kid on the block and 20+ years later, they are (almost) part of the establishment. Why? Because they have to protect their investment and, ultimately, the wheel will turn for them too. BA and SAA, however, are much MUCH further down the line. Their collective investment and history makes them heavier and more vulnerable.
And the heavier they are, the more difficult it is to change because the desire to protect what they have of the existing share holders/staff/contractors/suppliers is too great to risk. Which is why, they often land up losing everything. But this is how humans are and you can see it in every area of human existence. Frustrating it may be but it is what we do!.
I agree that it is not just about the aircraft. It is about the whole company and the way they behave. My point is that that kind of behaviour CAN NOT be changed. I look at BA and see how, despite the privatisation, they still have the big overheads and numerous bodies living in the corporate HQ (known as Waterworld) at EGLL. Tehir staff are still being told to make more savings and the bosses are still raking in bigger bonus'. Sound familiar?
The Ford Motor Company will also have these historical collections of people and practices that prevent it from competing with Kia.
So - how do you get rid of the history? That only happens when the company is either bought by a commercial competitor or goes bankrupt and the remnants are bought by a comemrcial competitor. The chances of any organisation/company/government changing it's spots is almost zero. That is why I say that SAA cannot change and can never compete - because it is subject to the history of the humans inside it and the history of the company.
Even if SAA were nationalised today and threw out tons of the history and cabins full of the staff at HQ - they would still not be competitive. Only a brand new organisation can be so.
In due course, RyanAir will grow to the point where it wlll not be so competitive - No matter what the mgmt of today might chant! An example? Virgin Atlantic Airways was the brash new kid on the block and 20+ years later, they are (almost) part of the establishment. Why? Because they have to protect their investment and, ultimately, the wheel will turn for them too. BA and SAA, however, are much MUCH further down the line. Their collective investment and history makes them heavier and more vulnerable.
And the heavier they are, the more difficult it is to change because the desire to protect what they have of the existing share holders/staff/contractors/suppliers is too great to risk. Which is why, they often land up losing everything. But this is how humans are and you can see it in every area of human existence. Frustrating it may be but it is what we do!.
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Wonder if the 6 A343's will replace the current 6 A342's or if they will be additional aircraft? Air Canada also has 2 A340-500's available from mid 2007.
Anyone heard any more on the rumours that SAA were looking to get Cathay's current 3 A346's (the one's with the heavier wings
) and/or some of the A346 HGW that Emirates was meant to take?
Anyone heard any more on the rumours that SAA were looking to get Cathay's current 3 A346's (the one's with the heavier wings
) and/or some of the A346 HGW that Emirates was meant to take?
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Said it before....
Said it before.... time for SAA to stop wasting tax payers bucks. We all know what the trouble with SAA is, everybody top to bottom, is over paid and under worked.
Until the cost structure is addressed, it doesn’t have a chance. And I am afraid that is flight deck include. I am happy for the guys to earn mega bucks, as long as it’s not my tax money paying for it.
If the market forces were allowed to play themselves out, we would have a healthier airline industry with more jobs and better pay for all.
This must be the only country in the world with three (yes, 3) state owned loss making airlines.
Yet most of SA lives in abject poverty. A strange world we live in. Cut the purse strings and let them sink or swim. There will be some short term pain, but all will be better off after.
Until the cost structure is addressed, it doesn’t have a chance. And I am afraid that is flight deck include. I am happy for the guys to earn mega bucks, as long as it’s not my tax money paying for it.
If the market forces were allowed to play themselves out, we would have a healthier airline industry with more jobs and better pay for all.
This must be the only country in the world with three (yes, 3) state owned loss making airlines.
Yet most of SA lives in abject poverty. A strange world we live in. Cut the purse strings and let them sink or swim. There will be some short term pain, but all will be better off after.
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facts?
The fact here is that the airline u mention has managed to run up R680 mill in debt. And thats NOT on fixed assets, thats to finance operating losses.
And just for the record, OPERATING PROFIT is the profit BEFORE finance cost of aircraft. That doesnt count.
Before anybody here goes off the deep end, I am not having a go at the ppl that work at these said airlines!!!
I think we all agree that the only long term solution for a healthy, fair, profitable airline industry is for the state to sell up its stakes and let the market work its magic.
And just for the record, OPERATING PROFIT is the profit BEFORE finance cost of aircraft. That doesnt count.
Before anybody here goes off the deep end, I am not having a go at the ppl that work at these said airlines!!!
I think we all agree that the only long term solution for a healthy, fair, profitable airline industry is for the state to sell up its stakes and let the market work its magic.
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Nope, that's not it...
AFAIK when 1 or 2 outstanding bills are settled (if they have not already been), there will be money IN the Bank.
Count the "Winglets" recently?
On 121.9 Mhz today:
"XXX...Give way to Springbok XXX, CRJ from the Charlie Ramp..."
"Uh...Ground...Say Again..!"
(Apologies, back to the original topic...)
AFAIK when 1 or 2 outstanding bills are settled (if they have not already been), there will be money IN the Bank.
Count the "Winglets" recently?
On 121.9 Mhz today:
"XXX...Give way to Springbok XXX, CRJ from the Charlie Ramp..."
"Uh...Ground...Say Again..!"
(Apologies, back to the original topic...)
Last edited by Q4NVS; 12th Dec 2006 at 12:02. Reason: All part of the fun!
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Mango, Mango, how art Thow!
This Mango operation seems to me the perfect vehicle to kick SAA and SAAPA in the b
s! Quantas and the Auzzie pilot unions have just had the wool pulled over their eyes by Jetstar! They are the low cost Quantas operation, and have taken a few of Emirates crew to operate their Airbus fleet. International operations will be boosted by B787's in the near future!
Before SAA wakes up, the domestic operations will be run by "lower" paid crew,e.g. Mango, working for a living! Will not be surprised if they start international operations - the only way to ensure profitability is to get rid of "old wood" pilots and top heavy management structures. Make the operations mean and lean, and money will be made by all.
s! Quantas and the Auzzie pilot unions have just had the wool pulled over their eyes by Jetstar! They are the low cost Quantas operation, and have taken a few of Emirates crew to operate their Airbus fleet. International operations will be boosted by B787's in the near future!Before SAA wakes up, the domestic operations will be run by "lower" paid crew,e.g. Mango, working for a living! Will not be surprised if they start international operations - the only way to ensure profitability is to get rid of "old wood" pilots and top heavy management structures. Make the operations mean and lean, and money will be made by all.
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I post this tentatively, don't want to cause unneccessary concern.
I have heard from a number of sources that there is a strong 'movement' to replace departments that are very strongly unionised by outsourcing them. I wonder if that is considered part of the retrenchment process??
I have heard from a number of sources that there is a strong 'movement' to replace departments that are very strongly unionised by outsourcing them. I wonder if that is considered part of the retrenchment process??
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SAA - the bottomless pit
Here's the latest - read & weep:
Man, I'm glad I'm not a taxpayer.
4HP
SAA seeks govt bail-out
The National Treasury has been asked to assist in improving the financial situation of South African Airways, the SABC reported on Tuesday. Public Enterprises Minister Alec Erwin said the recapitalisation will be accompanied by cost cutting efforts to improve the airline's profitability. He was speaking at a parliamentary hearing on a law that will take SAA out of the Transnet group and put it under the direct control of the Department of Public Enterprises. Erwin also said that a listing of the airline could be years away, adding that government would recapitalise the airline only in "exceptionally pressing circumstances". In comments to a parliamentary committee debating a bill to spin off SAA from transportation parastatal Transnet, the minister said it would "take years and not months" to conclude the IPO process. The bill would transfer SAA shares to the government and convert it into a public company with share capital.
SAA, which has struggled to cope with high fuel costs, fewer passengers and stiff competition from a burgeoning low-cost airline sector, turned a profit in its last financial year after several years in the red. Erwin added that he supported the principle of using the IPO as part of a turnaround strategy for the airline, which he said had a strategic value for tourism and other sectors of South Africa's economy. But he said he did not favour a long public debate over the prudence of moving ahead with the IPO. "I think, really, (it) would not be a very useful exercise. In fact it would probably jeopardise the option and foreclose our options," Erwin said. He said the state needed to be confident the airline would attract capital and hold its value after the IPO.
The National Treasury has been asked to assist in improving the financial situation of South African Airways, the SABC reported on Tuesday. Public Enterprises Minister Alec Erwin said the recapitalisation will be accompanied by cost cutting efforts to improve the airline's profitability. He was speaking at a parliamentary hearing on a law that will take SAA out of the Transnet group and put it under the direct control of the Department of Public Enterprises. Erwin also said that a listing of the airline could be years away, adding that government would recapitalise the airline only in "exceptionally pressing circumstances". In comments to a parliamentary committee debating a bill to spin off SAA from transportation parastatal Transnet, the minister said it would "take years and not months" to conclude the IPO process. The bill would transfer SAA shares to the government and convert it into a public company with share capital.
SAA, which has struggled to cope with high fuel costs, fewer passengers and stiff competition from a burgeoning low-cost airline sector, turned a profit in its last financial year after several years in the red. Erwin added that he supported the principle of using the IPO as part of a turnaround strategy for the airline, which he said had a strategic value for tourism and other sectors of South Africa's economy. But he said he did not favour a long public debate over the prudence of moving ahead with the IPO. "I think, really, (it) would not be a very useful exercise. In fact it would probably jeopardise the option and foreclose our options," Erwin said. He said the state needed to be confident the airline would attract capital and hold its value after the IPO.
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Let's all just remember a couple of things before this thread resumes as the SAA bashing thread.
1. The pilots are not at fault (but they will be blamed because of MOP and high salaries).
2. Some pilots will try and defend SAA but they will not defend the incompetence of the leadership of this once proud airline.
3. The amount is going to be astronomical and hopefully somebody somewhere near the top will take responsibility and admit they have really screwed it up.
And lastly but most importantly bear in mind if the government does not use the money on SAA it WILL be wasted elsewhere and it will not come back to us the taxpayer.
1. The pilots are not at fault (but they will be blamed because of MOP and high salaries).
2. Some pilots will try and defend SAA but they will not defend the incompetence of the leadership of this once proud airline.
3. The amount is going to be astronomical and hopefully somebody somewhere near the top will take responsibility and admit they have really screwed it up.
And lastly but most importantly bear in mind if the government does not use the money on SAA it WILL be wasted elsewhere and it will not come back to us the taxpayer.
Well said Actuator!
Incompetent leaderhip!! How long is this going to last? Someody needs to take the can, NOW!!
Im sure the citizens of this country have had enough of this bullsh t.
SAAPA should have followed through with their "VOTE Of No Confidence" in the present management, which was published in the press about a year ago!
Next we are going to hear about how profitable Mango is, while SAA is falling deeper in to the hole. Luckily SAA gave them R100 Mil and most probably pays for the lease of all 4 aircraft.
But management will tell the world that it all comes down to Pilot salaries!!
Watch the space
Incompetent leaderhip!! How long is this going to last? Someody needs to take the can, NOW!!
Im sure the citizens of this country have had enough of this bullsh
t.SAAPA should have followed through with their "VOTE Of No Confidence" in the present management, which was published in the press about a year ago!
Next we are going to hear about how profitable Mango is, while SAA is falling deeper in to the hole. Luckily SAA gave them R100 Mil and most probably pays for the lease of all 4 aircraft.
But management will tell the world that it all comes down to Pilot salaries!!
Watch the space
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It's payday AGAIN
Fly SAA.com for just R2bn
Nic Dawes and Jocelyn Newmarch
03 February 2007 11:59
News that South African Airways is seeking a R2-billion bail-out from the government has been roundly criticised by its competitors. However, economists say that without it, the troubled airline will be unable to attract much-needed private capital.
Chief executive Khaya Nqula said last year that SAA would try to raise the necessary capital on the markets so that government would not have to come up with it.
This week economist Iraj Abedian of Pan-African Advisory Services, also a non-executive director of Transnet, said that securing private sector funds will depend on whether “government comes to the party”.
South African Airways and the Department of Public Enterprises are going to the treasury yet again, seeking some R4-billion in state cash, loan guarantees, and private funding to stay afloat, and to grow the SAA fleet, even as losses mount.
The airline has previously said it needs “between R2-billion and R4-billion” to recapitalise, insisting it would raise the cash privately.
According to people familiar with the negotiations that took place this week SAA has decided to ask for R2-billion in new loan promises from the National Treasury, and permission to raise another R2-billion in the capital market.
Alec Erwin, minister of Public Enterprises, wants the government to provide backing for a larger, more stable SAA. He argues that under direct state control -- and separated from its parent Transnet -- the airline could be pushed to do better at delivering tourist and business passengers to South Africa. But the primary reason for moving SAA out of the Transnet stable is to relieve the larger group of responsibility for a deeply problematic subsidiary which was seen as an obstacle to Maria Ramos’s turnaround plans for rail and port operations.
This is the second time in three years that SAA has needed a major bail-out. In 2004 the airline got R6-billion through Transnet to close out its disastrous foreign currency hedges.
Critics believe SAA should be privatised and forced to compete on its own merits, and some ask why it needs cash for new aircraft when it controversially leased three of its newest Airbus A340-300 longhaul jets to the Indian carrier Jet.
The airline lost R652-million in the first six months of the 2006/7 financial year, and is planning 1 000 job cuts as part of an efficiency drive.
“The airline has experienced a tough year financially. While revenue is on track and passenger numbers are growing, operating costs remain a huge challenge,” said SAA spokesperson Jacqui O’Sullivan. She said the money would be used to strengthen the airline’s balance sheet and expand its route network and fleet. Further cost-cutting measures would also be investigated.
Others in the industry are more blunt. “[The bailout] is shocking,” said Glenn Orsmond, of low cost carrier 1Time. “It’s a u-turn on previous undertakings and they’re incurring massive operational losses.”
Meanwhile, Gidon Novick, CEO of SAA’s competitor, Comair, says that it’s time the state-owned carrier was privatised. “I don’t see any requirement for a state-owned airline. [Now] it’s not only one airline, but three airlines that are losing money -- SAA, SA Express and Mango.” Other airlines have been profitable from the start, he said, adding that the European Union does not allow member governments to fund airlines.
“Private businesses have an incentive to make profits. State-owned businesses don’t. That’s the difference that makes private business succeed and state-owned businesses fail, along with accountability to shareholders,” Novick said.
But privatisation might not be easy for the airline in its current state. “It’s not that no one wants to privatise it, it’s that no one wants to buy it,” said Abedian. Unless SAA is put in a profitable position, he said, no one will ever want to buy it.
Nic Dawes and Jocelyn Newmarch
03 February 2007 11:59
News that South African Airways is seeking a R2-billion bail-out from the government has been roundly criticised by its competitors. However, economists say that without it, the troubled airline will be unable to attract much-needed private capital.
Chief executive Khaya Nqula said last year that SAA would try to raise the necessary capital on the markets so that government would not have to come up with it.
This week economist Iraj Abedian of Pan-African Advisory Services, also a non-executive director of Transnet, said that securing private sector funds will depend on whether “government comes to the party”.
South African Airways and the Department of Public Enterprises are going to the treasury yet again, seeking some R4-billion in state cash, loan guarantees, and private funding to stay afloat, and to grow the SAA fleet, even as losses mount.
The airline has previously said it needs “between R2-billion and R4-billion” to recapitalise, insisting it would raise the cash privately.
According to people familiar with the negotiations that took place this week SAA has decided to ask for R2-billion in new loan promises from the National Treasury, and permission to raise another R2-billion in the capital market.
Alec Erwin, minister of Public Enterprises, wants the government to provide backing for a larger, more stable SAA. He argues that under direct state control -- and separated from its parent Transnet -- the airline could be pushed to do better at delivering tourist and business passengers to South Africa. But the primary reason for moving SAA out of the Transnet stable is to relieve the larger group of responsibility for a deeply problematic subsidiary which was seen as an obstacle to Maria Ramos’s turnaround plans for rail and port operations.
This is the second time in three years that SAA has needed a major bail-out. In 2004 the airline got R6-billion through Transnet to close out its disastrous foreign currency hedges.
Critics believe SAA should be privatised and forced to compete on its own merits, and some ask why it needs cash for new aircraft when it controversially leased three of its newest Airbus A340-300 longhaul jets to the Indian carrier Jet.
The airline lost R652-million in the first six months of the 2006/7 financial year, and is planning 1 000 job cuts as part of an efficiency drive.
“The airline has experienced a tough year financially. While revenue is on track and passenger numbers are growing, operating costs remain a huge challenge,” said SAA spokesperson Jacqui O’Sullivan. She said the money would be used to strengthen the airline’s balance sheet and expand its route network and fleet. Further cost-cutting measures would also be investigated.
Others in the industry are more blunt. “[The bailout] is shocking,” said Glenn Orsmond, of low cost carrier 1Time. “It’s a u-turn on previous undertakings and they’re incurring massive operational losses.”
Meanwhile, Gidon Novick, CEO of SAA’s competitor, Comair, says that it’s time the state-owned carrier was privatised. “I don’t see any requirement for a state-owned airline. [Now] it’s not only one airline, but three airlines that are losing money -- SAA, SA Express and Mango.” Other airlines have been profitable from the start, he said, adding that the European Union does not allow member governments to fund airlines.
“Private businesses have an incentive to make profits. State-owned businesses don’t. That’s the difference that makes private business succeed and state-owned businesses fail, along with accountability to shareholders,” Novick said.
But privatisation might not be easy for the airline in its current state. “It’s not that no one wants to privatise it, it’s that no one wants to buy it,” said Abedian. Unless SAA is put in a profitable position, he said, no one will ever want to buy it.
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It get's worse - profits down 90% but performance bonus payments are doubled -
Gravy train? Who said gravy train?
4HP
Total performance bonus payments to staff at the state airline South African Airways rose to R37.6m in the 2005/06 financial year, up from R24.7m in 2003/04 and just R15.4m in 2001/02, according to Public Enterprises Minister Alec Erwin. Responding on Wednesday to a written question in parliament from Democratic Alliance MP Manie van Dyk, the minister also noted that the net profit according to the annual report for 2006 was R65m, down from R648m in the previous year. However, a net loss of R8.7bn was recorded in 2004. SAA made an attributable loss of R652m in the six months to end-September 2006. Operating costs rose from R16.1bn in 2004 to R16.3bn in 2005, to R19.3bn in 2006. Revenue rose in this time from R16.3bn to R17.1bn to R19.4bn.
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How it should be done!!!!!
EMIRATES’ PROFITS HIT NEW HIGH ON SUSTAINED DOUBLE DIGIT GROWTH
• Group profit up 23.5 per cent to hit record Dhs 3.5 billion (US $942 million)
• Airline profit sets new mark at Dhs 3.1 billion (US $844 million)
• Dnata profit up 11 per cent to Dhs 360 million (US $98 million)
• Ownership to receive Dhs 400 million (US $109 million) dividend
• Group’s estimated contribution to Dubai economy worth Dhs 36.2 billion (US$9.9 billion)
DUBAI, U.A.E., 26th April 2007 – The Emirates Group today reported its 19th consecutive year of profit with a new record performance backed by continued double-digit growth.
Group net profits increased 23.5 per cent to a new high of UAE Dirhams 3.5 billion (US $942 million) for the financial year ended 31st March 2007, while Group revenue increased by an impressive 28.4 per cent to Dhs 31.1 billion ($8.5 billion), compared to Dhs 24.2 billion ($6.6 billion) last year. The Group also maintained a robust cash balance of Dhs 12.9 billion ($3.5 billion) at the end of March, an improvement of 17.8 per cent against a year earlier.
Emirates will pay a dividend of Dhs 400 million ($109 million) to its owner, the Government of Dubai. In total, the ownership will have received Dhs 1.8 billion ($505 million) from Emirates since the financial year 2000-01. In 2006-07, the Emirates Group estimates a direct contribution of Dhs 14.5 billion ($4 billion), and another Dhs 21.7 billion ($5.9 billion) in indirect contribution to the Dubai economy.
The 2006-07 Annual Report of the Emirates Group - comprising Emirates Airline, Dnata and subsidiary companies – was released in Dubai today at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group.
The Group’s latest record performance, backed by double-digit profit and revenue growth, reflects its success in growing demand for its services, and its ability to attract more premium customers through its multi-million dollar investments in product innovations and service enhancements. This is illustrated by the three million more passengers who flew Emirates in the latest financial year, for a new record total of 17.5 million.
Sheikh Ahmed said: “It has been another outstanding year of continued profitability and rapid growth. These results, against a backdrop of rising costs and significant aircraft delivery delays which have impacted our capacity growth, demonstrate Emirates’ ability to adapt and knuckle down to the challenge.”
He continued: “For the third year running, pressure from fuel costs has softened our profits, while the delay on our A380 aircraft deliveries has meant that we have had to revisit our expansion plans. In spite of these factors, the Group has continued to forge ahead, posting double-digit profit and revenue growth by expanding our operations into new markets and adding capacity to existing markets offering the highest returns; innovating to attract and retain premium customers; and keeping a close watch on unit costs.”
Sheikh Ahmed said: “The Emirates Group is exposed to fuel price fluctuations, rising interest rates, and the volatility of the US dollar against major currencies – all of which we have very little control over. In all other areas of our business, we have better control and in these we strive to improve efficiency and effectiveness, enhance productivity and constantly challenge the existing ways of doing business for continuous improvement. This is essential as we confidently stride ahead with our expansion plans and continue to invest in various new initiatives to manage the company’s growth.”
Across the Group, initiatives to improve efficiency and keep a tight rein on costs have also contributed to the positive results, as the Group maintained a strong net profit margin of 11.4 per cent.
Fuel costs remained the top expenditure accounting for 29.1 per cent of total operating costs, up from 27.2 per cent the previous year and 21.4 per cent the year before. Like other airlines, Emirates was forced to retain its fuel surcharges, which only covered about 50 per cent of incremental costs.
In a year where WTI crude oil prices have fluctuated from US$50 to $78 per barrel, Emirates’ challenge was to manage its fuel risk programme within a price range that ensured its net fuel cost remained below market levels. The airline’s jet fuel risk management programme continued to help mitigate fuel costs, saving the company Dhs 724 million ($197 million) in 2006-07.
In his opening review in the 2006-07 Annual Report, Sheikh Ahmed highlighted the mutually-supportive relationship between Dubai’s rapid development and the growth of Emirates and Dnata which have directly and indirectly contributed to the city’s growing infrastructure and reputation as an international centre for commerce and tourism.
He also remarked on how Emirates Airline has grown from a small operator of eight aircraft in 1990 to become the eighth largest international carrier in the world today with 102 aircraft and over 80 international destinations.
“I often get asked how it is possible Emirates can be so successful without subsidies or preferential treatment from the government,” he said. “There is no secret formula. We simply work hard, work smart, and have built our success on a sound and simple business model that focuses on growth, keeping unit costs low, and investing in innovations to keep ahead of the competition.”
Sheikh Ahmed concluded: “The Group’s strong performance this year is very gratifying. As with previous years, we intend to plough the retained profits back into our business – ensuring we have the right infrastructure, people and resources to support the company’s future growth, while providing our customers with the high quality services they have come to expect from us.”
Emirates Airline’s revenues totalled Dhs 29.8 billion ($8.1 billion) for the year, Dhs 6.8 billion ($1.8 billion) or 29.5 per cent higher than income of Dhs 23.1 billion ($6.3 billion) in 2005-06. Airline profits of Dhs 3.1 billion ($844 million) also surpassed the previous year’s record profits of Dhs 2.5 billion ($674 million).
With the addition of 12 new Boeing 777-300ER aircraft during the financial year, Emirates’ fleet reached 102 at the end of March, including nine freighters. The current fleet of all wide-bodied aircraft has an average age of 63 months – one of the youngest commercial fleet in the skies.
Amongst the highlights of the year was Emirates’ order for 10 Boeing 747-8 freighters worth Dhs 12.1 billion ($3.3 billion) at the 2006 Farnborough Air Show. The airline also ordered five additional Boeing 777-300ERs from GECAS on operating leases to meet its capacity requirements due to the delayed delivery of the A380s.
This will bring its 777-300ER fleet size to 59 which, coupled with its existing 777 fleet and freighters, will place Emirates as the largest operator of the 777 by 2010. Emirates’ current order book for 107 new aircraft is worth approximately Dhs 111 billion ($30 billion) in list prices. Over the next eight years, the airline will continue to receive delivery of one new aircraft per month on average.
During 2006-07, Emirates launched passenger services to four new cities – Bangalore, Beijing, Nagoya, and Tunis - bringing the network total to 89 destinations. In addition, it increased the frequency of passenger services to existing destinations, notably a second daily service to Zurich and Dusseldorf, along with a third daily flight to New York via Hamburg.
Passenger seat factor increased to 76.2 per cent from 75.9 per cent the previous year. Traffic increased by 21.6 per cent to 12,643 million tonne-kilometres, and keeping pace with a capacity increase of 22.9 per cent to 19,414 million tonne-kilometres. Breakeven load factor remained relatively low and improved marginally to 59.9 per cent from 60.2 per cent last year, while yield improved for the fifth consecutive year, to 216 fils (59 US cents) per RTKM (Revenue Tonne Kilometre), up from 203 fils (55 US cents) in 2005-06.
Over the past 12 months, nine new Emirates Lounges were opened at airports in key points across the airline’s network during the year, bringing to 18 the total number of world-class lounges dedicated to Emirates’ First and Business class customers and eligible frequent fliers. To date, the airline has invested Dhs 134 million ($37 million) in its lounge product, with another Dhs 49 million ($13 million) earmarked for 10 more Emirates Lounges in the financial year 2007-08.
Emirates also enhanced its product for young travellers, introducing a complimentary baby stroller service at Dubai airport and new onboard activity packs to keep its young customers happily entertained while flying.
The airline also progressed with its multi-million dollar programme to retrofit its existing 777 fleet with new SkyCruiser seats in First class, flat-bed seats in Business class, and its award-winning ‘ice’ inflight entertainment systems across all classes.
Emirates SkyCargo recorded strong growth across its network to carry 1.2 million tonnes of cargo, surpassing its record of one million tonnes of cargo carried last year by 13.5 per cent. The division’s revenue of Dhs 5.4 billion ($1.5 billion) was Dhs 874 million ($238 million) or 19 per cent higher than the year before, and contributed 20 per cent to the airline’s transport revenue, one of the highest contributions of any airline in the world with a similar fleet make-up.
In addition to the 10 Boeing 747-8 freighters ordered at the Farnborough Air Show, the division has signed a wet-lease agreement with TNT Airways S.A for a Boeing 747-400ERF commencing operations in May 2007, and another two aircraft of the same type from Guggenheim Aviation on dry-lease. The latter two aircraft will enter service in August 2007 and May 2008. Scheduled freighters now operate to 29 destinations. In all, Emirates SkyCargo carries freight in 102 aircraft, including nine freighters, to 89 cities.
The Destination and Leisure Management division of Emirates Airline saw another strong year of growth, with sales crossing the Dhs 1 billion ($314 million) mark. This represents an improvement of 22 per cent over the previous year, with yield up eight per cent despite the increasing competitive market conditions. During the year, Emirates Holidays and Arabian Adventures served a record number of 369,000 customers.
The division’s new Emirates Hotels & Resorts arm also continued to develop, and this financial year will see the launch of two new properties – Emirates Marina Hotel & Residence, due to open in September 2007, and Emirates Green Lakes Serviced Apartments, scheduled to open in January 2008.
Dnata recorded a solid performance with revenue growth of 16.5 per cent to Dhs 2.1 billion ($565 million) compared with Dhs 1.8 billion ($485 million). Dnata’s profits of Dhs 360 million ($98 million) represent an increase of 11 per cent compared to last year’s Dhs 324 million ($88 million) – this despite the mammoth challenge to keep operations at the Dubai airport and cargo terminals running smoothly around one of the biggest airport construction and expansion projects currently in progress.
In its 48th year of operation, Dnata remains at the heart of the rapid traffic growth at Dubai International Airport, handling a record 30 million passengers (up 17.2 per cent), 110,000 aircraft (up eight per cent) and 535,132 tonnes of cargo (up six per cent) during the 2006-07 fiscal year. Its corporate and retail travel arm, Dnata Agencies, also reported a 37 per cent increase in turnover, repositioned its retail brand Dnata Holidays to focus on luxury travellers, and celebrated its 40th year as GSA for seven airlines while welcoming three new airline customers.
As of 31st March 2007, the Group employed 30,344 people, up 13 per cent from a year before. In the past 12 months, Emirates has been receiving 60 new cabin crew recruits each week on average, and now has over 8,000 cabin crew representing more than 100 nationalities. Its 1,667 captains and first officers represent over 75 nationalities.
The Group’s Facilities Management Department currently has Dhs 580 million ($158 million) worth of new projects in Dubai under various stages of design and construction including: 700 apartments for cabin crew accommodation in Media City, a new call centre in Dubai Outsource Zone, new offices for D&LM on Sheikh Zayed Road and a new operations centre at Dubai Investment Park, and storage warehousing in Ghusais.
• Group profit up 23.5 per cent to hit record Dhs 3.5 billion (US $942 million)
• Airline profit sets new mark at Dhs 3.1 billion (US $844 million)
• Dnata profit up 11 per cent to Dhs 360 million (US $98 million)
• Ownership to receive Dhs 400 million (US $109 million) dividend
• Group’s estimated contribution to Dubai economy worth Dhs 36.2 billion (US$9.9 billion)
DUBAI, U.A.E., 26th April 2007 – The Emirates Group today reported its 19th consecutive year of profit with a new record performance backed by continued double-digit growth.
Group net profits increased 23.5 per cent to a new high of UAE Dirhams 3.5 billion (US $942 million) for the financial year ended 31st March 2007, while Group revenue increased by an impressive 28.4 per cent to Dhs 31.1 billion ($8.5 billion), compared to Dhs 24.2 billion ($6.6 billion) last year. The Group also maintained a robust cash balance of Dhs 12.9 billion ($3.5 billion) at the end of March, an improvement of 17.8 per cent against a year earlier.
Emirates will pay a dividend of Dhs 400 million ($109 million) to its owner, the Government of Dubai. In total, the ownership will have received Dhs 1.8 billion ($505 million) from Emirates since the financial year 2000-01. In 2006-07, the Emirates Group estimates a direct contribution of Dhs 14.5 billion ($4 billion), and another Dhs 21.7 billion ($5.9 billion) in indirect contribution to the Dubai economy.
The 2006-07 Annual Report of the Emirates Group - comprising Emirates Airline, Dnata and subsidiary companies – was released in Dubai today at a news conference hosted by His Highness Sheikh Ahmed bin Saeed Al-Maktoum, Chairman and Chief Executive, Emirates Airline and Group.
The Group’s latest record performance, backed by double-digit profit and revenue growth, reflects its success in growing demand for its services, and its ability to attract more premium customers through its multi-million dollar investments in product innovations and service enhancements. This is illustrated by the three million more passengers who flew Emirates in the latest financial year, for a new record total of 17.5 million.
Sheikh Ahmed said: “It has been another outstanding year of continued profitability and rapid growth. These results, against a backdrop of rising costs and significant aircraft delivery delays which have impacted our capacity growth, demonstrate Emirates’ ability to adapt and knuckle down to the challenge.”
He continued: “For the third year running, pressure from fuel costs has softened our profits, while the delay on our A380 aircraft deliveries has meant that we have had to revisit our expansion plans. In spite of these factors, the Group has continued to forge ahead, posting double-digit profit and revenue growth by expanding our operations into new markets and adding capacity to existing markets offering the highest returns; innovating to attract and retain premium customers; and keeping a close watch on unit costs.”
Sheikh Ahmed said: “The Emirates Group is exposed to fuel price fluctuations, rising interest rates, and the volatility of the US dollar against major currencies – all of which we have very little control over. In all other areas of our business, we have better control and in these we strive to improve efficiency and effectiveness, enhance productivity and constantly challenge the existing ways of doing business for continuous improvement. This is essential as we confidently stride ahead with our expansion plans and continue to invest in various new initiatives to manage the company’s growth.”
Across the Group, initiatives to improve efficiency and keep a tight rein on costs have also contributed to the positive results, as the Group maintained a strong net profit margin of 11.4 per cent.
Fuel costs remained the top expenditure accounting for 29.1 per cent of total operating costs, up from 27.2 per cent the previous year and 21.4 per cent the year before. Like other airlines, Emirates was forced to retain its fuel surcharges, which only covered about 50 per cent of incremental costs.
In a year where WTI crude oil prices have fluctuated from US$50 to $78 per barrel, Emirates’ challenge was to manage its fuel risk programme within a price range that ensured its net fuel cost remained below market levels. The airline’s jet fuel risk management programme continued to help mitigate fuel costs, saving the company Dhs 724 million ($197 million) in 2006-07.
In his opening review in the 2006-07 Annual Report, Sheikh Ahmed highlighted the mutually-supportive relationship between Dubai’s rapid development and the growth of Emirates and Dnata which have directly and indirectly contributed to the city’s growing infrastructure and reputation as an international centre for commerce and tourism.
He also remarked on how Emirates Airline has grown from a small operator of eight aircraft in 1990 to become the eighth largest international carrier in the world today with 102 aircraft and over 80 international destinations.
“I often get asked how it is possible Emirates can be so successful without subsidies or preferential treatment from the government,” he said. “There is no secret formula. We simply work hard, work smart, and have built our success on a sound and simple business model that focuses on growth, keeping unit costs low, and investing in innovations to keep ahead of the competition.”
Sheikh Ahmed concluded: “The Group’s strong performance this year is very gratifying. As with previous years, we intend to plough the retained profits back into our business – ensuring we have the right infrastructure, people and resources to support the company’s future growth, while providing our customers with the high quality services they have come to expect from us.”
Emirates Airline’s revenues totalled Dhs 29.8 billion ($8.1 billion) for the year, Dhs 6.8 billion ($1.8 billion) or 29.5 per cent higher than income of Dhs 23.1 billion ($6.3 billion) in 2005-06. Airline profits of Dhs 3.1 billion ($844 million) also surpassed the previous year’s record profits of Dhs 2.5 billion ($674 million).
With the addition of 12 new Boeing 777-300ER aircraft during the financial year, Emirates’ fleet reached 102 at the end of March, including nine freighters. The current fleet of all wide-bodied aircraft has an average age of 63 months – one of the youngest commercial fleet in the skies.
Amongst the highlights of the year was Emirates’ order for 10 Boeing 747-8 freighters worth Dhs 12.1 billion ($3.3 billion) at the 2006 Farnborough Air Show. The airline also ordered five additional Boeing 777-300ERs from GECAS on operating leases to meet its capacity requirements due to the delayed delivery of the A380s.
This will bring its 777-300ER fleet size to 59 which, coupled with its existing 777 fleet and freighters, will place Emirates as the largest operator of the 777 by 2010. Emirates’ current order book for 107 new aircraft is worth approximately Dhs 111 billion ($30 billion) in list prices. Over the next eight years, the airline will continue to receive delivery of one new aircraft per month on average.
During 2006-07, Emirates launched passenger services to four new cities – Bangalore, Beijing, Nagoya, and Tunis - bringing the network total to 89 destinations. In addition, it increased the frequency of passenger services to existing destinations, notably a second daily service to Zurich and Dusseldorf, along with a third daily flight to New York via Hamburg.
Passenger seat factor increased to 76.2 per cent from 75.9 per cent the previous year. Traffic increased by 21.6 per cent to 12,643 million tonne-kilometres, and keeping pace with a capacity increase of 22.9 per cent to 19,414 million tonne-kilometres. Breakeven load factor remained relatively low and improved marginally to 59.9 per cent from 60.2 per cent last year, while yield improved for the fifth consecutive year, to 216 fils (59 US cents) per RTKM (Revenue Tonne Kilometre), up from 203 fils (55 US cents) in 2005-06.
Over the past 12 months, nine new Emirates Lounges were opened at airports in key points across the airline’s network during the year, bringing to 18 the total number of world-class lounges dedicated to Emirates’ First and Business class customers and eligible frequent fliers. To date, the airline has invested Dhs 134 million ($37 million) in its lounge product, with another Dhs 49 million ($13 million) earmarked for 10 more Emirates Lounges in the financial year 2007-08.
Emirates also enhanced its product for young travellers, introducing a complimentary baby stroller service at Dubai airport and new onboard activity packs to keep its young customers happily entertained while flying.
The airline also progressed with its multi-million dollar programme to retrofit its existing 777 fleet with new SkyCruiser seats in First class, flat-bed seats in Business class, and its award-winning ‘ice’ inflight entertainment systems across all classes.
Emirates SkyCargo recorded strong growth across its network to carry 1.2 million tonnes of cargo, surpassing its record of one million tonnes of cargo carried last year by 13.5 per cent. The division’s revenue of Dhs 5.4 billion ($1.5 billion) was Dhs 874 million ($238 million) or 19 per cent higher than the year before, and contributed 20 per cent to the airline’s transport revenue, one of the highest contributions of any airline in the world with a similar fleet make-up.
In addition to the 10 Boeing 747-8 freighters ordered at the Farnborough Air Show, the division has signed a wet-lease agreement with TNT Airways S.A for a Boeing 747-400ERF commencing operations in May 2007, and another two aircraft of the same type from Guggenheim Aviation on dry-lease. The latter two aircraft will enter service in August 2007 and May 2008. Scheduled freighters now operate to 29 destinations. In all, Emirates SkyCargo carries freight in 102 aircraft, including nine freighters, to 89 cities.
The Destination and Leisure Management division of Emirates Airline saw another strong year of growth, with sales crossing the Dhs 1 billion ($314 million) mark. This represents an improvement of 22 per cent over the previous year, with yield up eight per cent despite the increasing competitive market conditions. During the year, Emirates Holidays and Arabian Adventures served a record number of 369,000 customers.
The division’s new Emirates Hotels & Resorts arm also continued to develop, and this financial year will see the launch of two new properties – Emirates Marina Hotel & Residence, due to open in September 2007, and Emirates Green Lakes Serviced Apartments, scheduled to open in January 2008.
Dnata recorded a solid performance with revenue growth of 16.5 per cent to Dhs 2.1 billion ($565 million) compared with Dhs 1.8 billion ($485 million). Dnata’s profits of Dhs 360 million ($98 million) represent an increase of 11 per cent compared to last year’s Dhs 324 million ($88 million) – this despite the mammoth challenge to keep operations at the Dubai airport and cargo terminals running smoothly around one of the biggest airport construction and expansion projects currently in progress.
In its 48th year of operation, Dnata remains at the heart of the rapid traffic growth at Dubai International Airport, handling a record 30 million passengers (up 17.2 per cent), 110,000 aircraft (up eight per cent) and 535,132 tonnes of cargo (up six per cent) during the 2006-07 fiscal year. Its corporate and retail travel arm, Dnata Agencies, also reported a 37 per cent increase in turnover, repositioned its retail brand Dnata Holidays to focus on luxury travellers, and celebrated its 40th year as GSA for seven airlines while welcoming three new airline customers.
As of 31st March 2007, the Group employed 30,344 people, up 13 per cent from a year before. In the past 12 months, Emirates has been receiving 60 new cabin crew recruits each week on average, and now has over 8,000 cabin crew representing more than 100 nationalities. Its 1,667 captains and first officers represent over 75 nationalities.
The Group’s Facilities Management Department currently has Dhs 580 million ($158 million) worth of new projects in Dubai under various stages of design and construction including: 700 apartments for cabin crew accommodation in Media City, a new call centre in Dubai Outsource Zone, new offices for D&LM on Sheikh Zayed Road and a new operations centre at Dubai Investment Park, and storage warehousing in Ghusais.
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Yes you are quite right that is how it should be done, BUT, one has to question, as did the CEO`s of QF, CX, BA etc etc, what the extent of UAE goverment support is. How are they financing all the new jets?
Why is it though that they SAA pilots are so defensive of their employer in all these threads, yet when you see them in the Pub on layovers they are less than complementry of their employer. The fact is, SAA is sick, has been for a long time and something has to be done from within, before all my mates find themselves in the UIF line.
2006 = profit R65mil, bonuses to directors R37mil. thats where you start, better get a move on
Why is it though that they SAA pilots are so defensive of their employer in all these threads, yet when you see them in the Pub on layovers they are less than complementry of their employer. The fact is, SAA is sick, has been for a long time and something has to be done from within, before all my mates find themselves in the UIF line.
2006 = profit R65mil, bonuses to directors R37mil. thats where you start, better get a move on
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How are they financing all the new jets?
up a cash reserve of about 4 Billion USD over the years, so out of that thay pay the order deposit and then sell the aircraft to international banks and lnvestmentgroups and lease them back in. Some interesting owners on the registration plates in the cockpit. I think we only own about 4 aircraft outright.
This turns out to be a win win situation as Dubai is tax free, Emirates don't have the ability to right off tax against depretciation(spelling) on there balance sheet but the owners do in there countries.
Note that the above is all speculation on observations.
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That is precisley how the European Loco's have been making profits for the last few years but some one is going to burst the bubble sooner or later and it will all come crashing down!