A combination of geo-political and macroeconomic factors brought about a sharp reduction in earnings at Emirates Airline in the 2016-17 financial year, the Dubai-based carrier reported May 11.

Net profit dropped 82.5% compared to 2015-16, at AED1.25 billion ($340 million) compared to net profit of AED7.13 billion last year. Revenue for the period was static at AED85 billion.

Emirates Group chairman & CEO Sheikh Ahmed bin Saeed Al Maktoum said the aviation and travel markets were notoriously vulnerable to social, economic and political events and “for us, this year has been a particularly testing one.”

He cited a combination of global terrorist attacks, the attempted coup in Turkey, the UK’s vote to leave the European Union and the election of US President Donald Trump.

He said the last of these factors, in particular, had affected Emirates, noting that the new US administration “in its first three months issued a raft of new measures relating to entry requirements, enhanced security vetting procedures, and restrictions on personal electronic devices in aircraft cabins. These all directly impacted Emirates’ operations into the US.

“Our strong track record, business foundations, and brand reputation—all that we have painstakingly built over the years, have stood us in good stead, enabling us to weather the turbulent year.”

Even highly successful Emirates has not been immune to the global squeeze on yields: “While there are still patches of clear skies for aviation and travel in parts of Asia, Africa, and Oceania, generally across the board, airline margins have taken a battering as the industry lowered fares to motivate travel in a weak global economic environment,” Al Maktoum said.

“Meanwhile the strong US dollar against currencies in our major markets kept eroding our top line, and our operations in some parts of Africa continued to face ongoing currency devaluations and repatriation challenges.

“In August [2016], we tackled one of the biggest tests in the airline’s history when our flight EK521 from Thiruvananthapuram, India, crash-landed on arrival in Dubai. Thankfully, all passengers and crew onboard evacuated the aircraft safely before the aircraft caught fire. But sadly, one brave firefighter lost his life in the line of duty, and our thoughts will always be with him and his family.”

The airline’s figures for 2016-17 show that an 8.1% rise in the number of passengers carried, which reached 56.1 million, did not keep pace with a 10.3% increase in capacity, measured in ASKs, which rose to 368 billion. Load factor dropped 1.4 points to 75.1%.

Cargo carried increased 2.7%, to 2.58 million tonnes.

The other main component of Emirates Group, the dnata ground-handling company, saw its profits rise to AED1.2 billion from just over AED1 billion a year earlier.

“Dnata bucked industry trends to mark its most successful and profitable year of operations yet,” Al Maktoum said.

“Our airport operations division made several key investments, which significantly grew our footprint in the Americas. This includes the acquisition of Ground Services International in the US, which added 18 airports to our international airport operations network; a 50% stake in GTA Aviation’s cargo and ground handling operations at Toronto Pearson International Airport, Canada; and the addition of Sao Paulo and Rio de Janeiro to our existing Brazilian operations.”

Taken overall, the Group reported a net profit of AED2.5 billion, down 70% from last year’s record profit, with Group total revenue of AED95 billion, a 2% increase on 2015-16.

Over the year, Emirates added 35 aircraft to its fleet while retiring 27, the largest fleet roll-over program in the carrier’s history and one that brought its average fleet age down to 63 months, compared with 74 months last year. The industry average is 140 months.

Alan Dron alandron@adepteditorial.com