Dubai — Emirates, the world's biggest operator of long-haul flights, said Sunday it doesn't see travel demand returning to "normality" before 18 months as the coronavirus outbreak cut passenger numbers in its latest financial year ended March 31. The company also reported a "fuel hedge ineffectiveness" at the end of the period.
Emirates, the world's biggest owner of A380 and Boeing's 777 fleet, halted most of its passenger operations in March as the UAE suspended flights, except for cargo and evacuation flights. Emirates resumed limited outbound flights on April 6 and said on May 9 it is operating limited passenger flights to carry travelers from select destinations back to the UAE.
"We expect it will take 18 months at least, before travel demand returns to a semblance of normality," Sheikh Ahmed bin Saeed al-Maktoum, chairman of Emirates, said in a statement.
"In the meantime, we are actively engaging with regulators and relevant stakeholders as they work to define standards to ensure the health and safety of travelers and operators in a post-pandemic world."
The suspension of regular passenger flights in the UAE has hit regional and even global fuel demand.
Jet fuel demand in the UAE alone accounted in 2019 for more than 30% of the jet fuel consumption in the Middle East region and more than 2.5% of the global jet fuel demand, according to S&P Global Platts Analytics. The demand does not include refueling aboard of UAE's international flights.
The company's fuel bill, the biggest cost component for the airline, declined in the latest financial year as oil prices dropped. The average price of jet fuel declined by 9% in the year ended March 31, compared with a 22% increase a year earlier, Emirates said.
"Including a 6% lower uplift in line with capacity reduction, the airline's fuel bill declined substantially by 15% over last year to AED 26.3 billion (US$ 7.2 billion) and accounted for 31% of operating costs, compared to 32% in 2018-19," it said.
Emirates said it carried 56.2 million passengers during the latest 12 month period, a 4% decline from the year-earlier period.
Cargo volumes dropped by 10% to 2.4 million tons "due to the capacity reduction with the retirement of one Boeing 777 freighter and reduced available bellyhold capacity in the first and last quarters of the year," it said.
Overall for the year, revenue declined by 6% to 92 billion dirhams, impacted by a planned 45-day runway closure and temporary suspension of passenger flights in March. But overall profit rose 21% to 1.1 billion dirhams and would have been even higher if not for a loss of 1.1 billion dirhams due to a "fuel hedge ineffectiveness at year end," the company said.
The UAE's aviation industry is forecast to lose $6.8 billion in passenger revenue amid a 53% drop in passenger numbers from 2019, compared with a previous estimate of $5.36 billion, the International Air Transport Association said in a report last month. IATA represents 290 airlines comprising 82% of global air traffic. The UAE aviation industry is the region's second hardest hit market from the coronavirus outbreak after Saudi Arabia.