Emirates, the largest airline in the Middle East, posted a drop of annual profit Thursday for the first time in the past five years. The airline had added more seating than it was able to fill and stiffer competition applied pressure to prices of tickets.
The company, based in Dubai, said that net profit for its airline had dropped by 82% to just over Dhs1.3 billion equal to US$354 million for the year ending March 31.
That was the first time since fiscal year 2011-12 that annual profit for the airline had fallen.
Airlines across the globe have been pressured by fares the past few years because of the volatile demand and competition, though major carriers in Europe recently said that pricing pressure has started to ease.
Emirates added so many seats during the year it could not fill them all which led to a drop in its average yield per passenger.
The carriers said several events helped to destabilize results including the vote by Britain to exit the European Union as well as travel restrictions put into place by the U.S. affecting demand during the past year for air travel.
Last month, the airline also stated that its plans for expansion in the U.S. were put on hold after it announced that flights to five cities in the U.S. were to be cut due to weaker demand blamed on the travel restrictions imposed by the new White House administration.
Sheikh Ahmed bin Saeed al-Maktoum the chairman at Emirates said the year ahead would remain challenging.
Air carriers in the Middle East have experienced slower growth during the last two years as travel budgets across the region have been tightened because of lower prices of oil and militant attacks in Turkey and other places in Europe weakened traffic flow from east to west.
The revenue at the airline was flat ending the year at Dhs85.1 billion. The company said a rise in the value of the dollar in its key markets costs it over Dhs2.1 billion in overall airline revenue.
Its cost of fuel was up 6% for the year ending at Dhs21 billion and made up more than 25% of its overall operating costs in comparison to 26% for 2016.
Emirates hauled 56.1 million overall passengers during the year, which was an increase of 8% compared to the previous year though its load factor or the number of seats it filled, dropped 1.4% to 75.1% as capacity increased by 10%.