São Paulo – Plummeting oil prices can potentially help Dubai’s Emirates Airline post gains from fuel savings as early as the 2014/2015 fiscal year, which ends with this month. At a conference on border security in Dubai this Thursday (12th), the company’s COO Adel Al Redha said there has been a “direct reduction” of operating costs stemming from the fuel price reduction.
According to information from news agency Reuters, the airline expects spending on fuel to amount to 35% to 37% of overall expenditure. In the last fiscal year, said costs made up 42% of total expenses. The fiscal year for Emirates Airline begins on April 1st and closes on March 31st of the following year.
The International Air Transport Association (Iata) estimates the combined net income of airlines worldwide in 2015 at US$ 25 billion. The estimate for 2014 was US$ 19.9 billion. The higher earnings are expected mostly due to plummeting oil prices. The oil barrel has fallen from US$ 106 by June 2014 to less than US$ 60 in 2015. As of this Thursday, the Brent barrel went for US$ 57.32 at closing time.
While reduced fuel spending may help the company, currency depreciation, on the other hand, could detract from Emirates’ results. In Russia, Europe and India, for instance, falling currencies have eaten away at the airline’s margins. In some cases, net income was slashed in half.
Redha said lower fuel-related spending could drive the company to reduce airfares, as some of its counterparts already have. Still, the goal for Emirates will be to retain its profit margins so it can roll out investment plans and meet set targets.
*Translated by Gabriel Pomerancblum
