"We achieve what we do because of our people. We choose them very carefully, and just as important, they choose us very carefully"

Maurice Flanagan,
Group Managing Director

September 11 was above all a many-faceted human tragedy against which our day-to-day commercial concerns seem insignificant. However, at this lower level, one of the consequences of that awful event has been to make this a very tough year indeed for international civil aviation. Global passenger traffic declined by 4% and cargo by 9% in the aftermath of September 11. In sum, the world’s airlines lost some US$12 billion during this period and, together with the manufacturers and the wider travel and tourism industry, hundreds of thousands of employees became redundant. According to research by the World Travel and Tourism Council, global travel and tourism demand declined by 4.4% in real terms in 2001 and is expected to fall by another 3% in 2002.

As His Highness has said, the Emirates Group was hard hit immediately after September 11. Our business suffered particularly badly from the perception that, despite the appalling evidence to the contrary, the nearer one is to Afghanistan, the greater the risk, and Dubai was falsely perceived as being very close. Traffic on most of our routes, especially our crucial European routes, fell drastically.

It is, therefore, satisfying to be able to report, less than seven months later, that the Group more than recovered its equilibrium. We reached the 2001-02 profit target that we set a year ago, declaring an overall net profit of Dhs 603 million (US$164.2 million). His Highness has described the actions we took, and some we deliberately did not take, to achieve this result.

This leads me to something that is beginning to concern us. We have become wearily accustomed to one or two self-proclaimed experts in our industry declaring publicly that, of course, Emirates could not possibly achieve consistently profitable results without some form of hidden subsidy, despite our publication of transparent audited annual accounts. More serious now, however, is the possible effect on governments of such ill-informed allegations, implying as they do that Emirates has an unfair advantage over other national carriers and that this should be borne in mind when those governments decide what traffic rights we might be offered or, in the protection of their own carriers, denied. This hits us on a vulnerable spot because we ourselves have no such protection at all. The Government of Dubai, in the promotion of Dubai’s economy, sensibly maintains an Open Skies policy. We are therefore subject to unlimited foreign competition in our home market. In these circumstances, we have to be smart to survive, and I am happy to say that we do much more than survive. It follows, therefore, that we must be quite smart at running an airline, a factor which does not seem to occur to the above one or two.

We achieve what we do because of our people. We choose them very carefully and, just as important, they choose us very carefully. Because of them we have won over 200 major international awards in the 16 years of the airline’s existence, two of the latest being the top position of all airlines in the Skytrax Internet survey with over four million respondents, and “Best Airline” in UK’s Daily Telegraph’s travel awards poll.

Let me tell you some more things about our people, a rich and stimulating mix of over 103 different nationalities:

• Our Chairman’s Annual Award went to two of our Security Staff who selflessly put their own lives at risk
  in an emergency affecting another airline.
• Less dramatically, the 70 managers across the Group who have developed their individual skills by attending our new in-house Bradford University MBA Programme - in their own time.
• Our Larnaca airport staff who for seven years managed to keep operations running safely and efficiently from our sales agent’s city office, before the airport authority allocated us an airport office. You needed to be there. You have to be in the industry to understand what a triumph over adversity that was.
• Our catering staff who, with ultimate success, searched the Dubai beaches, mile after mile to deliver a cake for two passengers who had at the last minute taken an earlier flight than booked, thus missing the honeymoon cake on board ordered by the groom.
• Two of our cabin staff who saved a passenger’s life on one of our Nairobi flights. This was the second time our defibrillators had been used successfully and reflects not only the care, attention, and training of our staff but the forward thinking of our medical department in ensuring that such equipment is on board all our aircraft.

We plan for a dynamic future. As I said last year, we are very fortunate to have a far-sighted government, our owners. A few months later His Highness General Sheikh Mohammed bin Rashid Al-Maktoum, Crown Prince of Dubai, announced plans to attract 15 million annual visitors to the emirate by 2010. In parallel with other major infrastructure developments, including the two exciting Palm Island projects, Emirates reflected its intrinsic links with the future of Dubai by announcing our US$15 billion aircraft order at the Dubai Airshow in November, 2001.

Incidentally, the Dubai Airshow, under the confident and determined management of our Chairman, was a huge success, despite the post-September 11 misgivings and misconceptions which I mentioned earlier. Although the A380, Boeing 777, and A340-600 orders made the headlines at the Airshow, our Group also announced plans for a massively expanded Emirates Aviation College, incorporating the existing college and the Dubai Aviation College, plus a substantial joint venture with the Canadian CAE company, the world’s top flight simulator manufacturer. Construction starts this year, with completion in 2003.

So, in the circumstances an exceptional year for the Group, with the airline profit up 11% from Dhs 421.8 million to Dhs 468.2 million and Dnata returning a net income of Dhs 134.8 million, compared with Dhs109.5 million the previous year.

Airline passenger numbers grew by 18.3% to 6.8 million, with seat factor down slightly from 75.1% to 74.3% and available seat kilometres up by 19.7%, with costs up by only 13.6%, reflecting our improved productivity.
Cargo tonnage rose 19.5% to 400,569 tonnes. Nevertheless, our Cargo people complain that we carry too many passengers, with the result that their baggage leaves no room in the holds for cargo. That situation has been eased by the operation of our own Boeing 747-400 freighter, on wet lease from Atlas Air, and additionally by scheduled charter operations. And we have ordered two huge A380 freighters.

I salute our Group’s team of world class players, those on the front line in operations, sales and marketing, and the backroom men and women supporting them, whose efforts are detailed in this report of a “Year in the Life” of the Emirates Group.

Maurice Flanagan