"The rapid development of Dubai and its goal of attracting 15 million visitors in the coming decade was the main driving force behind Emirates' plans to acquire $15 billion worth of new aircraft. "

His Highness
Sheikh Ahmed bin Saeed Al-Maktoum,
Chairman

With the world in an official recession this was always going to be a difficult year, but the tragic events of September 11 plunged the airline industry into its worst-ever year, with a number of revered names threatened with collapse and erstwhile profitable companies making record losses.

This notoriously cyclical industry of ours was already at the bottom of the cycle at the beginning of September 2001. The horrors of September 11 plunged it into chaos. We were not immune. Our seat factors collapsed and profitability disappeared into a black hole. It would have been forgivable to batten down the hatches, slash costs by announcing large numbers of redundancies as several other carriers did, and forget about our prognosis for another profitable year.
But we did not. Although I announced a recruitment freeze (excluding flight deck and cabin crew) we did not make a single employee redundant, and paid salary increments in full. We only briefly and marginally reduced our schedules, redoubled our efforts in our markets, severely restrained costs and kept to our plans.
This meant lending our full support to the Government of Dubai’s massive infrastructure plans to develop commerce and tourism and attract 15 million annual visitors by the year 2010, a strategy in which we have the utmost confidence. Consequently, at the Dubai Air Show in November, we announced orders for US$15 billion worth of new aircraft, covering 22 A380 Super Jumbos (with 10 options), 25 Boeing 777s, and eight A340-600s, in addition to the six A340-500 very long range Airbuses (with 10 options) already on order.

We continued to cement this confidence in the aviation industry, Emirates and Dubai with subsequent orders for US$1.5 billion worth of Alliance engines, to power the A380s, announced at the Singapore Air Show.

In the meantime, Dnata too, has faced enormous challenges. The travel agency side of the business was hit hard by the post September 11 downturn but had managed to recover by the end of the year and our ground handling agency business felt the effects of a 10% downturn in the last quarter of 2001 at Dubai International Airport.

Dnata Airport Services has been involved in the comprehensive discussions taking place at the planning stage for the dramatic expansion of Dubai Airport, again bucking the trend, we announced plans for a second concourse and a third terminal, dedicated to Emirates, to be opened in 2006. This multi-million dollar project will include an underground terminal and intra-concourse monorail connections.

Among numerous others awards, Emirates was again voted “Airline of the Year 2002” by 4,000,000 internet users in the second annual Skytrax Research Study and Best Cargo Airline to the Middle East for the 14th time by Air Cargo News.

Dnata Agencies received commendations from a number of airlines while Dnata Cargo achieved the distinction of being awarded ISO9001/2000 certification for its standard of service at Dubai International Airport. This is in addition to the ISO 9001/1995 certificate already held.
The Finance Department won no less than four awards for its Islamic and Export Credit Agency financing arranged by HSBC for an A330 aircraft, including the prestigious “Global Airline Treasury Team of the Year”.

Also outstanding was the enthusiastic response to our first bond issue in July 2001. Initially launched for Dhs 750 Million (US$204 million), the
bond closed for Dhs 1,500 million (US$ 408 million) being over subscribed more than two and a half times.

In a normal year our profitable results would have been a superb achievement, in 2001-2002 it is exceptional, and probably unique among international scheduled airlines.

On revenues of Dhs 7.8 billion, the group’s net income was Dhs 603 million with Emirates contributing Dhs 468.2 million and Dnata making Dhs 134.8 million.
Emirates is pleased once again to be able to make a provision for a dividend of Dhs 100 million to be paid to our shareholder, the Dubai Government, and I am happy to announce a bonus payment of three weeks’ salary to all our staff.

I thank our dedicated and accomplished staff and management for their achievement which, in the context of 2001-02, can only be described as amazing.

AHMED BIN SAEED AL-MAKTOUM