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3 May, 2004

Emirates Says It Needs No “Guru’s Teachings” to Succeed

DUBAI: In announcing record profits of US$ 476 million last week, the management of the Emirates airline and travel group clearly enjoyed taking a few tongue-in-cheek digs at hawkers of ‘conventional wisdom’ in global aviation, its competitors as well as countries that artificially restrict traffic rights.

The Dubai-based group said its profits for the financial year ending 31 March 2004 were up 67 % over the previous year, based on total revenues of US$ 3.8 billion, up 35.5 %. It paid a dividend of US$ 90 million.

Said the group chairman Sheikh Ahmed bin Saeed Al Maktoum at a press conference last week, “As usual, we managed to buck the trend of a travel industry which stagnated, at best, for the first three to four months of 2003 with the aftermath of SARS, the conflict in Iraq and the weak global economy.

“The Group has continued to prosper and we have not been tempted to compare ourselves with other airlines or travel organisations. We have not joined any alliances nor followed any ‘guru’s teachings’ and have simply knuckled down to winning more supporters by offering them quality products.”

Sheikh Ahmed added, “I would not like to claim that my crystal ball is always as accurate as this, but I have learnt over the years that the recipe for our continued success remains the same: the exploitation of Dubai’s location as a global hub, and equally the exploitation of the government’s visionary development programme which is well on the way to establishing Dubai as the world’s leading city state, for commerce and tourism, of this new century; our multi-billion dollar investment in new equipment and, crucially, the skill and dedication of our team.”

Last February, the UAE signed an open-sky agreement with Thailand, its second in Southeast Asia after Singapore. The airline’s President Tim Clark indicated that other countries may like to consider following suit.

He noted the tourism industries of destinations like Australia, Sri Lanka and Mauritius were reaping the benefits of being linked to Dubai. In terms of seat capacity, Emirates is now the third largest carrier to Australia after Qantas and Singapore Airlines, and set to overtake SIA in January 2005 when it boosts flights to 41 a week.

Said Mr. Clark, “When we were a regional carrier, the major airlines of the world welcomed us with open arms, for which we were grateful, but today as we create a global network, many of the homelands protect the national carriers at the expense of their tourism industry. We take this as an accolade while sympathising with the hotels, sightseeing and other businesses which would benefit from our services.”

The executives cited other trend-bucking formulas for success. Sheikh Ahmed noted, “It is rare for a Chairman in the volatile aviation industry to be able to retain the same senior management over a lengthy period, but in Dnata (the airport ground handling and travel agent subsidiary) and Emirates most of my colleagues at divisional level have been with us for 10 years or more.”

Managing Director Maurice Flanagan said that inspite of all the bad times due to SARS and Iraq, the airline made another trend-bucking move by announcing last June the biggest-ever aircraft order of US$ 19 billion (Dhs 69.7 billion) “which many of my colleagues in other airlines considered incomprehensible. They did not know what we know.

“Sustained strong expansion, which has now relieved Dubai of dependence on its declining oil income, has been running for over two decades, resulting in an average annual growth of passenger traffic through Dubai International Airport of 16% a year.

“That rate will be sustainable for many years – look around Dubai and you will see the reason why. There are more cranes in Dubai than in the whole of Canada,” Mr. Flanagan claimed.

The airline’s competitors were also not spared. Said Mr. Clark, “Emirates’ success, contrary to the opinions of some of our competitors, does not come automatically, nor is it fuelled by tax-free fuel. The sales teams out in the field and the support staff in Dubai, have toiled very hard to tell the world about the advantages of flying Emirates.

“Roadshows, seminars, personal visits, PR and advertising campaigns have all been utilised to spread the word. The vision is being fulfilled by increasing capacity, opening new routes and thereby improving Emirates’ share in the global marketplace. As a result we carried a record number of passengers during the year – more than 10 million.”

The international investment community apparently concurs. Sheikh Rashid noted “the successful conclusion of Emirates’ first international bond issue (listed in Luxembourg) which was oversubscribed by 25% and closed at US$ 500 million (Dhs 1.8 billion). This is the largest ever unrated Eurobond issue by an airline…”

The Group contribution to the Dubai economy totalled US$ 1.5 billion in direct expenditure and another US$ 2.2 billion in indirect expenditure.

The group also attracts 20,000 job applications each month through its website, advertising and roadshows. Said Mr. Flanagan, “If we pick the wrong people, it is our fault because we cannot re-programme them, so rigorous selection procedures are amongst the highest of our priorities.”

In 2004/5, the airline plans to increase its capacity by 26% and open new routes to the USA, China and Europe.

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