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Case Study
Analysis of Luxury Airlines
Emirates Airways and competitors

Under Supervision of

Prof. Riccaboni Massimo


Abedelazez Safi

May 2011

Electronic copy available at: Electronic copy available at:

During the last decade travel and tourism has assisted the Emirates Group in spreading
its wings into every aspect of travel, tourism and business to become the fastest growing
corporation in its field.
Emirates airlines and Middle East aviation system will face strong challenges with
global aviation during the coming years. In the mean while,the overall growth
aspiration of the region demands a high-performing aviation system including airlines,
airports, and air traffic control (ATC) that in 20 years must successfully serve more than
four times the passengers it serves today. However, international benchmarks illustrate
that even todays aviation system does not fulfill current demand. In many Middle East
countries, aviation systems quality and efficiency levels are well below international
levels (e.g., compared to Europe and Asia). Heavy regulation also has resulted in
limited service in terms of route frequency and destinations, high customer prices, and a
need for high government subsidies to maintain the system.

Middle East aviation markets especially United Arab Emirates have set the level for
reforming their aviation systems and have started encouraging trading and deregulation
of airlines rules. In addition, the Middle airline sector plays a smart role in developing a
world-class, such as Qatar Airways (which has a five-star Skytrax ranking) and
Emirates Group (which has above-average profitability).
Aviation and transport infrastructure is the fundamental catalyst for the creation of
global cities. The UAEs open skies policy is the cornerstone upon which Dubai built its
dynamic air transport hub, which in turn supports the growth of other industry sectors.
The growth of Emirates embodies the spirit of competition and free enterprise, which
will continue to guide their policies for the benefit of the UAE and of the global
community in which they operate.

Finally, analyzing Emirates airline challenges through SWOT analysis and comparing it with
Lufthansa Group a prove of being very active with Cargo and shipment services and passenger
cater through developing there technology and advertise there 40 brands and looking to the
needs of the customers. It was very obvious of the strengthen of innovation and creativity of
Emirates is much stronger then the weakness and keep in going to hire new employees and
buying new plans even during Dubai crisis. After compering Emirates with Lufthansa Group the
largest airlines in terms of passenger and second largest airline of fleet aircraft. We will prove
that Emirates is the most innovative and the fastest airlines growing in the world since they are
25 years old and Lufthansa 86 years old.

Ringbeck. J, Majdalani. F, Ismail. A, Mastering the Challenges of the Middle East Aviation System, 28 July 2006, Booz Allen Hamilton GmbH, p.1.
Al Maktoum. M, Emirates Group Annual Reprot 2009-2010,, p.3.

Emirates Airways Overview......5
Leadership Team and Style...................6
Emirates Airline Alliance......6
Aviation Industry Scenario.......6
Emirates Strategy.......7
Emirates Operational Excellence Highlights & Fleet Information...8
Fleet Acquisition and Financing.......9
Overcoming Recent Aviation Challenges.....9
Operational Strategies.......9
New Markets and Payment Schemes Technology.....10
Customer Satisfaction Objectives...11
Knowledge Excellence of the Organization....13
Emirates Financial Highlights.........13
Geographical Revenue.....16
Currency and Interest Rate Risk....17
SWOT Analysis for Emirates Airways...20
Lufthansa vs. Emirates........22
Lufthansa Airlines overview............22
Airline subsidiaries wholly owned by Lufthansa...22
Alliances and Partner Airlines........23
Lufthansa and Group Fleet ........24
Lufthansa Group Financial Highlights..........25
Lufthansa Group in Comparison with Competitors.........28
Emirates Airline in Comparison with Lufthansa Group......28


Table 1: Fleet Information of Emirates Airline9
Table 2: Financial Highlights of Emirates Airline US$ million.....14
Table 3: Revenue of Emirates Airline in US$ Million....16
Table 4: Geographical Revenue in US$ Million......17
Table 5: Operating costs.......18
Table 6 Group fleet Number of commercial aircraft and fleet orders...24
Table 7: Fleet Order Of Lufthansa Group..........25
Table 8: Lufthansa Group Financial highlights..........27
Table 9: Comparing Lufthansa Group with Emirates Airline..........28
Table 10: GDP Development Forecast 2010 to 2013.....29

Figure 1: Aircraft Departure.....12
Figure 2: Operating Profit in United Arab Emirates Currency...............15
Figure 3: Revenue of Emirates Airline in United Arab Emirates currency.15
Figure 4: Jet fuel Costs in % during last 5 years ...18
Figure 5: Revenue & Operating profit in EUR..25
Figure 6: Lufthansa Group with competitors British Airways and Air France-


Emirates Airways Overview
During the mid-1980s, Gulf Air began to cut back its services to Dubai as it was concerned it
was providing regional feeder flights for other carriers. As a result Emirates was conceived in
March 1985 with backing from Dubai's royal family, and was required to operate independent
of government subsidies, apart from US$10 million in start-up capital.

Emirates Airline first
flight on October 25, 1985 by the government of Dubai. The airline industry has started its
operations with flights to Mumbai and Karachi and then followed by Delhi in September.
Today the industry is considered to be a subsidiary of the Emirates Group which is
headquartered in Dubai, UAE.

The Emirates Group is composed of Emirates Airlines, airport services provider the Dubai
National Air Transport Association (DNATA), other transportation-related activities, and a
hotel group. Owned by the government of Dubai.
Emirates have flourished under the
sheikdom's "wide open skies" policy, which has brought more than 100 foreign airlines to
Dubai's efficient airport, the busiest in the Middle East.
The airline, simply known as Emirates, is renowned for luxurious in-flight service as well as
consistently profitable growth. It is the largest airline in the Middle East, operating over 2,400
passenger flights per week,
and it is unique among long-haul airlines in its resistance to joining
a global alliance such as the Star Alliance or Oneworld. Emirates do, however, participate in
code-sharing arrangements with several carriers and has a minority holding in Sri Lankan

The company has been provided with different recognitions and in 2010 Emirates was noted to
be the sixth-largest airline in the global market in terms of international passengers being
carried and largest in the world in terms of scheduled international passenger-kilometers flown.
Emirates are also known for being one of the only five airline industries that operates in the
entire wide-body aircraft feel.

With a fleet of 152 aircraft,
they are currently fly to over 103 destinations in 65 countries
around the world, and their network is expanding constantly.
Nearly 700 Emirates flights
depart Dubai each week on their way to destinations on six continents. In fact, Emirates'
flights account for nearly 40 per cent of all flight movements in and out of Dubai International
Airport, while in 2010 they increase their market-share to 70 per cent.

Propelled forward by their united strength, the two have evolved at a phenomenal rate to
establish the Emirates Group as an immense organization, spanning a portfolio of more than 50
brands and employing over 50,000 people.

"CuL PlsLory". LmlraLes group. hLLp:// 8eLrleved 2 March 2011.
Benham, J. "Dubai moves ownership of Emirates, Dnata to ICD Transportation".
41385.html. Published 2008-12-31.
"LmlraLes Lo hlre 700 plloLs over nexL 18 monLhs". Culf news. hLLp:// 8eLrleved 3 March 2011.
"lrequenLly Asked CuesLlons". LmlraLes webslLe. hLLp:// 8eLrleved 2011-03-03.
"Scheduled assenger - kllomeLers llown". hLLp:// 8eLrleved 2011-03-03.
"LmlraLes - ueLalls and lleeL PlsLory." hLLp://www.planespoLLers.neL/Alrllne/LmlraLes?show=all. 8eLrleved 2011-03-3.
LmlraLes launches flrsL dlrecL fllghL from Mlddle LasL Lo SouLh Amerlca (2 CcLober 2007). hLLp://
souLh-amerlca-1.203006. 8eLrleved on 2 CcLober 2007.
Emirates Group Annual Report 2009-2010,, p.45.

It can be sent that since Emirates started its business operations, they are able to gain
competitive position and advantage in the market place. Todays leaders of Emirates are
considered to be the most influential and essential people in the company as they are the one
who make everything possible for the industry. Sheik and other leaders of the company have
been able to show their innate ability to lead the company efficiently and effectively.

Leadership Team and Style
The Emirates Group (Emirates Airline and DNATA) success has been the continuity of its
management team, many of whom have been with the airline since its start of the company. The
leadership team has 23 years of experience inside the company. HH Sheikh Ahmed bin Saeed
Al Maktoum (Chairman and Chief Executive, Emirates Airline & Group), Maurice Flanagan
CBE Executive Vice Chairman (Emirates Airline & Group), and Tim Clark (President Emirates

In the case of Emirates leader, they can be considered as an influential and democratic kind of
leader. It is known the leadership composes the aptitude and skills to inspire as well as influence
the behaviour and the thinking of the people or the subordinates. It is a process of social
influence in which an individual can able to provide the support and assistance for others to
achieve common goal. It can be said that the decision of Emirates Group leaders to requisite an
extraordinary board meeting to deal with the issue and other leaders like Flanagan suggests that
he is possess the democratic type of leadership. It can be perceived in the given case study that
Emirates leader looked for final decisions made by the other members of the corporation
especially the shareholders.

Emirates are currently not a member of any of the three global airline alliances Oneworld,
SkyTeam and Star Alliance. In 2000, however, the carrier briefly considered joining the latter,
but opted to remain independent of the three alliances. The reason for this was later revealed by
senior vice-president of the airline's commercial operations worldwide that, "Your ability to
react in the marketplace is hindered because you need a consensus from your alliance

Codeshare agreements as of January 2011, Emirates has codeshare agreements with the
following airlines:

Air Malta
Air Mauritius
Continental Airlines (Star Alliance)
Japan Airlines (Oneworld)
Jet Airways

.Emirates Group Annual Report 2009-2010, Leadership Team Ibid. p.10.
Leadershlp. LmlraLes Croup. hLLp:// 8eLrleved 2011-03-6
Peasley, Andrew (1/11/10). "Lone LmlraLes sLlll flylng hlgh on luxury". hLLp:// 8eLrleved 6
March 2011.
"lrequenLly Asked CuesLlons". LmlraLes webslLe. hLLp:// 8eLrleved 2011-03-03.

Korean Air (SkyTeam)
Oman Air
Philippine Airlines
Royal Air Maroc
South African Airways (Star Alliance)
Thai Airways International (Star Alliance)
V Australia


The global aviation industry suffered a disastrous during the crises, with more than a score of
airline bankruptcies, shrinkage in airline networks and service levels and IATA adjusted its
estimates for 2009 net losses from US$11 billion to US$9.4 billion. In the all Aviation sectors
the airlines suffered contraction, fierce price-cutting and firing the employees.

While the oil prices had dominated the first half of 2008, global recession characterized the
second half and presented a grim picture for those planning the 2009-2010 fiscal years. Falling
demand, shattered consumer confidence and collapsing yields confronted the airlines. A 15%
contraction in world trade saw changed business patterns which in turn meant that travel
budgets were slashed. According to Emirates Airline, the global aviation industry, faced with a
need to invest a collective US$ 1 trillion in new, more fuel-efficient aircraft, was confronted
with a banking industry reluctant to lend after the near collapse of the finance sector.


The challenges faced by Emirates Airline same as any other aviation industry it was lucky to be
operating in the Middle East where there was still positive growth in air travel, truism and
aviation industry. According to the International Air Transport Association (IATA), "Middle
Eastern carriers saw demand grow 14.3 percent, the highest among the regions. The regions
carriers continue to add capacity, increasing 15.3 percent in October and outpacing the growth
in demand".

Emirates airline was able to generate a net profit of US$ 964 million, an increase of US$ 777
million on revenues of US$ 11.8 billion, that is clear sign of efficient response to the design
took in every area of the business.

Emirates was also able to catch up with new ideas and challenges from their experience in the
international environment and leaving the old traditional practices behind from being beside the
customer and understand their needs through innovations and new ideas. This aim was very

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Emirates Group Annual Report 2009-2010, Ibid p.10.
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8eLrleved 2011/03/06.
Emirates Group Annual Report 2009-2010, Ibid, p.38.

important for the company to make thing easier for customer safety and entertainment. Two
examples which illustrate this philosophy:

When the crisis hit the world and Dubai specifically the financial institutions had almost
stopped lending the money, Emirates continued to have requirements for new financing to
support its growth program. Also they create new financial instrument that generated
considerable excitement in the aviation and financial sectors and was recognized by an industry
From advance technology and a new level of safety customer sides, Emirates will be the first
airline in the world to introduce the Smart-Landing and Smart-Runway safety solutions to
reduce the risk of runway incursions and excursions. Which will be the level of safety to
landing an aircraft.

Customer service the heart of the company for Emirates and any other airlines in the world, so
Emirates was able to resolve and keep developing in this sector through increasing the network,
frequencies and rising service standards and add more value to the customer experience.
Emirates airline Said There was no temptation shown by the company to compromise
standards or adopt a holding operation until the world economy recovered. And keep
challenging to improve their product and pioneering new ideas with their own. All that growth
and continue facing the risk of the recession and not get heart because of they maintain their
growth strategy.

Emirates Operational Excellence Highlights and Fleet Information

Every months and year they have surprise news about their fleet but they keep developing this
important asset and put it in track. During 2009-2010 the company took delivery of 15 new
aircraft, 4 Airbus A380s and 11 Boeing 777s. This brought their fleet to 152 aircraft and 194
aircraft on order up to date
, 50 Airbus A380s, 21 Boeing 777s, 5 Boeing 747s and 70 Airbus
A350 XWBs plus 50 options on the type. The company plan to take delivery of new aircraft at
an average of one per month, it also continues to be in negotiations with the manufacturers for
additional aircraft. [Table 1] illustrates Fleet information of Emirates Airline for 2009-2010
with fleet of 142 aircraft and 146 on order

Airbus A380 is the ultimate symbol of Emirates pioneering spirit they call it superjumbo.
A380 continue to be the headline on any new airport in the world, including Bangkok, Toronto,
Paris, Seoul and Jeddah, the first regional airport to take the aircraft. These destinations were
added to an A380 network that already included Heathrow (a second superjumbo service a day
will be added during 2010), Sydney and Auckland.

Emirates Group Annual Report 2009-2010.Ibid, p.16-20.
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LmlraLes A380 news & LvenLs." hLLp:// 8eLrleved 2011/3/08.

Table 1: Fleet information of Emirates Airlines, Resources: Emirates Groups Annual Report 2009-10)

Fleet Acquisition and Financing

During the financial year (2009-2010), Emirates raised a total of US$ 2,389 million in aircraft
financing including aircraft operating leases over the period under review, and have already
received offers of finance covering all deliveries due in the forthcoming financial year. Eight
B777-300ER aircraft were funded through finance leases, (with the option to refinance in the
capital markets); two through sale and lease back transactions while the freighter was financed
as a pure operating lease.
According to Emirates airline, the financial highlight of the year was the first ever financing of
Boeing aircraft through capital markets guaranteed by the US Export-Import bank on finance
lease. This allowed the transaction to raise US$ 413 million to finance three Boeing 777-
300ERs. And this is the type of new financial instruments which Emirates created. This new
structure reached a much deeper and broader investor base than the conventional bank market,
which hitherto had been the traditional source of investors for Ex-Im Bank guaranteed export
finance. The result was a more durable financing solution that is less vulnerable to the financial
stress that constricted the banking institutions starting in the fourth quarter of 2008. The
transaction was also recognized by the industry as ground-breaking and earned accolades from
the financing community. Emirates have gone on to refinance two more 777-300ER aircrafts in
the capital markets through this innovative structure.
The four Airbus A380 units delivered, two were financed as finance leases and two through sale
and lease back transactions using the German KG market. During the year, also they
successfully closed two sale and lease back transactions for eight spare engines and two B777-
200 classic aircraft.

Emirates Group Annual Report 2009-2010, Ibid, p.18-21.


Overcoming Recent Aviation Challenges

Operational Strategies

The global Aviation industry face strong challenges through the recession, while Emirate face
the same challenges they used their experience in this field in very clear way and continue to
take delivery of new aircraft, also invest in their brand, expend network, that was surprise to all
other airlines competitor because it went opposite prevailing industry theory on increasing

Cost containment strategy used to maintain organizational costs within a specified budget and to
restraining expenditures to meet organizational or project financial targets. To face all this
challenges it was a prior and initiatives were launched at all levels to deliver savings. Internal
auditing initiatives designed to underpin cost containment included the introduction of the
concept of Control Self Assessment at all outstations. This strategy was balanced against the
need to safeguard jobs and keep staff costs at significantly lower levels than many of their

New Markets and Payment Schemes Technology

New markets were added to Emirates operation this year inside and outside Dubai. By creating
global account manager they added value to existing customers. The new markets target,
including the increasingly important cruise segment operating out of Dubai. New agreements
were signed with Costa Cruises and Royal Caribbean International. A lots of packages were
delivered during the major events, including the 2010 FIFA World Cup
, the Dubai World Cup
and the Dubai Rugby 7s.
They made them by innovative payment schemes for those booking
online. Cardholders were offered the chance with zero percent interest to pay for tickets in three
monthly installments. This system made an incentive way to most customers to move online to
use their business transactions. This system available in 59 countries and in 13 languages, it is
growing rapidly. Revenue via continues to grow at 45% a year and in some
markets contributes more than 20% of total revenue. Using this new innovative technology and
the swings of consumer behavior, to shape the price policy was sophisticated. They take time
when the highly sophisticated software systems that routinely track the business and set the
price which compete the competitor all that price setting majored by the team member
experience. They also took critical decisions on pricing that ran counter to the prevailing
conventions that then informed the airline industry. Maintained fares while managing healthy
yields supported by excellent load factors. While the competitors continued to discount airfares
to loss levels. This was not a paradox, they made this because to sustained investment in the
brand and make it powerful loyalty among customers. All this stability made the customer
willing to pay a premium for that. Emirates didnt just protect it is route network, but also they
expanding it each year. Up to March 2011 they continue increasing there network routes until
they reach 103 destination, so they add new destination to there network and that is one of main

Emirates Group Annual Report 2009-2010, Ibid p.18.
"LmlraLes". hLLp:// 8eLrleved 2011-03-20.
Emirates Group Annual Report 2009-2010 lbld p.14, p.18-24

strategy to become global airline to join any two points on the earth through Dubai airport.
Some of the new route was Dubai-Tokyo, after long waited service and a year negotiation.
Considering Emirates as global business they were lobbying on behalf of globalization and
against the stirrings of protectionism that have resulted from the recession.

They made major success of deployment the most efficient Boeing 777-300ER to the West
Coast of the United States through the operational procedures and the use of new flight paths. It
brands the company in very fast way through using the showcased in Bahamas of new flight
paths. That was one operation to transport FIFA delegates to the Nassau destination. This smart
strategy of using the assets was evident on the airfreight side, which tends to be first in, first
out in bad economic times. According to Emirates annual report, during 2009-2010 the global
industry declined by 10%, registering a 23% fall in one month alone. So the Emirates Sky
Cargo used a strategy of protecting and securing cargo market share, and they success of doing
it through resistant on fast responding to downturn and rightsizing their fleets. That made big
achievement in business though double-digit growing in the volumes transported. They started
the 2009 with 8 aircrafts, and ended it with seven freighters, 5 Boeing 747Fs and two Boeing
777Fs. After on they brand new aircraft and benefits were gain a lot from their efficiency and by
using the strategy of economies of scale as they took their place in a large fleet of that type.
Despite of the crisis and due to economic situation, advertising spend was redirected from
corporate to tactical advertising campaigns to support there specific markets. They are also
known to be in sport sponsorship, so they continued with a US$ 81.6 million deal to back Italian
football, AC Milan. And in cricket, became the sponsor of the high profile Twenty 20 World
Cup held in England.
The Emirates Airline marks its 25th anniversary, which is great tactic to
remind people of long-term survive Brand.

New technological progress was also made in digital communications, with their website traffic
to increasing while other airline web traffic worldwide is in decline comparing to
Emirates. Their website traffic reached the highest peak in the first quarter of 2010.
In the recession time of global aviation, Emirates was able to show up in every famous event
and be attractive brand for the customers. That make the communication channels of the
company to continue for long term marketing strategy and showing the excellent way of
knowing who and where to use their business with low costs expenses.

Customer Satisfaction Objectives

Continue building their new strategy every where in the world for each year in 2009-2010 they
opened an additional six Emirates lounges including those at Hamburg, Manchester and
Mumbai airports, the latter being the first lounge in India. Around US$ 72.5 million worldwide
investments dedicated for this new lounges, for first and business class customers and top-tier
Skywards. The lounges are a distinctive feature of Emirates and were giving attraction for their
customers. With the 6 new Emirates lounges in total they have 26 airport lounges world wide.

Emirates Group Annual Report 2009-2010, Ibid p.23
Cpen Sky, 1he publlc affalrs [ournal of LmlraLes." hLLp:// 8eLrleved 2011/03/20.
Emirates Group Annual Reprot 2009-2010, Ibid p.20-21.

Aircraft Departures
Every Each year we find significant change in Emirates Airlines If we look at the Aircraft
departures in Figure 1 we will see the increased by 12.4% to 123,055 in comparison with
109,477 in 2008-2009.
the eremitical increase in traffic came principally from:

Introducing new services to Durban, Luanda and Tokyo. Also increase frequencies to
several existing destinations, mainly Jakarta, Rome, Doha, Bangkok, Kolkata and Kozhikode.
Increase capacity to several existing destinations with bigger aircraft, mainly Dusseldorf,
Munich, Paris, Seoul and Hong Kong.

More new investment in their product, they raised baggage allowances by ten kilograms extra
per person across all seating classes. This was one of the most competitive tools with all their
competitors. Also they gave new improvement in bag handling at Dubai International Airport.
Around US$ 78 million has been invested in adding cabin interiors and the in-flight
entertainment system, like ice as part of the emphasis on continuous improvement to the fleet.
The refresh cabin was completed on 26 Airbus aircraft and on four aircraft in the B777 fleet.

As more passengers migrate to online check-in, they redeployed more stuff from routine check-
in duties to personal passenger help which will increase their services level. Even getting in
touch with Emirates became easier during the coming years with the upgrading Emirates
Contact Centers under a contract with British Telecom Global Connect.

Dubai International on course to become fastest growing major international airport.
hLLp://!an10.hLm. 8eLrleved 2011-03-20.
Emirates Group Annual Reprot 2009-2010, Ibid p.41.
Ibid p.20.
Figure 1: Aircraft Departure (Source: Emirates Groups Annual Report 2009-2010)

Knowledge Excellence of the Organization

Emirates Group as an immense organization are spanning a portfolio of more than 50 brands
and employing over 50,000 employees for over 150 countries. The commitment to continuous
improvement in product and service is completed by the ongoing drive to implement the greater
efficiencies in all technical areas. The efficiencies translate into cost savings and more
environmentally friendly operations it proof the excellence of the company. For support the
growing Emirates fleet, they planned to open a Technical Facility for maintenance in 2010 at a
cost in excess of US$ 545 million. Also it includes a paint shop that will be used to repaint the
aircraft using advanced technology paints capable of reducing in-flight drag. New indictor
received has been seen during the year that 1,000th GE90 engine for the Boeing 777 fleet, and
the 6,000th Airbus production aircraft an A380. This support form Emirate to their own
platform for securing their future in an efficient way from the partnership such as Boeing,
Airbus and Rolls Royce, it describe the key excellent of the company for the coming challenges.
Also, the new Plan for opening of terminal 3 in the third quarter of 2012 for Dubai International
Airport is another new levels of excellence.


In this part of the paper we will try to explain the most important subjects of the financial
Emirates airline annual report of the company of 2009-2010. As we can see from table 2
Emirates was able to return a net profit of US$ 964 million, an increase of US$ 777 million on
revenues of US$ 11.8 billion despite the increasing capacity in the Airport and the aircraft
industry while the change in percentage in comparison with the last year was 56.4% which is a
testament to the superb response to the situation made by every area of the business chosen by
the company.
In the coming pages will see the comparison between Emirates airline and
Lufthansa airline with it subsidiaries and showing how this excellence testament of the
company in generating 56.4% of net profit. The 17.1% of increasing with Emirates total assets
is a significant from the company of show non-stop in growing strategy, which is proof the
increasing number of the aircraft up to 142 during the year 2009-2010 whilst the aircraft
number reach 152 up to date.

Emirates Group Annual Report 2009-2010, Ibid p.20.
lbld p.4.
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Table 2: Financial Highlights of Emirates Airlines US$ million

2009-10 2008-09 Change
Revenue and results US$ m US$ m %
Revenue and other operating income 11,834 11,782 0.4
Operating profit million $ 964 620 56.5
Operating margin % 8.2 5.3 2.9
Profit attribute to the Owner million $ 963 186 41.5
Profit margin % 8.1 1.6 6.5
Return on shareholder's funds % 21.6 4.4 17.2
Financial position and cash flow
Total assets million $ 15,127 12,921 17.1
Cash assets million $ 2,862 2,006 42.7
Net debt (including aircraft operating
lease) equity ratio %
158.5 167 8.5
EBITDAR million $ 2,897 2,256 28.4
EBITDAR margin % 24.5 19.2 5.3
Airline operating statistics
Passengers carried number 000 27,454 22,731 20.8
Cargo carried tonnes000 1,580 1,408 12.2
Passenger seat factor % 78.1 75.8 2.3
Overall capacity ATKM million 28,526 24,597 16.9
Available seat kilometers ASKM million 161,756 134,180 20.6
Aircraft Number 142 127 12
Employee data
Average employee strength number 36,652 35,812 2.3


Emirates ended the financial year with an operating profit of AED 3,565 million (US$ 964
million) which is AED 1,287 million (US$ 350.4 million) or 56.5% better than the previous
year and a healthy operating margin of 8.2% or 2.9 percentage points higher than last year. The

Emirates Group Annual Report 2009-2010, Ibid p.4.


profit margin also recovered to 8.1% from 1.6%, as significant achievement in a difficult year
which indicated in Figure 2 using the operating Profit in United Arab Emirates currency (AED).


Figure 3 Showing the Revenue of Emirates Airline for the last five years in United Arab
Emirates Currency (AED) in billion remained stable in the last two years. In 2009-10 AED
42,477 million (US$ 11,567 million) in comparison with 2008-09 AED 42,459 million (US$
11,562 million) they are very close. The reason behind the stability of the last two years came
from stability of the passenger revenue and the decline in the cargo revenue because of the
decrease of the freight yield per FTKM
during the Dubai crisis at the end of 2009. We will see
that in details at table 3 showing the revenue of Emirates Airline.

Figure 3: Revenue of Emirates Airline in United Arab Emirates Currency, (Source:
Emirates Groups Annual Report 2009-2010).
In Table 3 we introduced the Revenue of Emirates Airline in US$ Million. Passenger revenue at
US$ 8,985 million was marginally higher by US$ 79.7 million While Cargo revenue at US$

Emirates Group Annual Report 2009-2010, Ibid p.38-39.
FTKM : Cargo tonnage uplifted multiplied by the distance carried.
Emirates Group Annual Report 2009-2010, Ibid p.38-39.
Figure 2: Operating Profit in United Arab Emirates Currency, (Source: Emirates
Groups Annual Report 2009-2010).

1,719 million is 8.1% lower than last year (2008-09: US$ 1,871 million), also the result of
declining yields. While cargo tonnage increased by 12.2% over the previous year mainly in the
second half of the year, freight yield per FTKM declined by 18.9%. Revenue from cargo, mail
and courier continues to constitute an important 17.2% (2008-09: 18.2%) of Emirates transport

Table 3: Revenue of Emirates Airline in US$ Million

US$ million
US$ million
Passenger 8,985 8,904 0.9
Cargo 1,719 1,871 (8.1)
Courier 116 95 22.6
Excess baggage 75 95 (20.3)
Mail 42 34 23.8
Transport Revenue 10,940 11,000 (0.6)
Sale of goods 470 425 10.5
Destination and leisure 42 52 (19.6)
Other 114 83 37.5
Total 11,567 11,562 _

Emirates Group Annual Report 2009-2010,lbld p.38-40
Ibid p.38.

Geographical Revenue

There was an increase and decrease in geographical area this change came for the shift in
transport revenues if we check table 4 we will see Americas continent 8.1% is the highest in
comparison with other this surprise impact came from opening new routes while the West Asia
and Indian Ocean region experienced stronger revenue growth over other regions, but in
revenue East Asia and Australasia in the highest during the year 2009-2010 that is confirm the
operation of emirates are very high in this region because the have most of there network
destinations in this regions. Europe coming the second in revenue even though have less
destination than Asia region they are also sponsor of famous sport teams and very high
promotion in their brand name.

Table 4: Geographical Revenue in US$ Million

Year Gulf,
Europe Americas East Asia
West Asia
and Indian
Africa Total
2009-10 1,345 3,162 1,090 3,225 1,449 1,295 11567761410
2008-09 1,318 3,318 1,008 3,294 1,344 1,278 11562859470
%Change 2.00% (4.70)% 8.10% (2.10)% 7.80% 1.30%


If we check table 5 we can see the total operating cost of the 2009-10 year at US$ 10,863
million were US$ 299 million or 2.7% less than the previous year the main reason was behind
the reduction in the jet fuel bill which is lower by US$ 690.3 million or 17.6%.
More than that the Employee cost increase by 8.3% which compares with 15.9% growth in
capacity, reflecting an impressive productivity gain per airline employee, and employee
numbers also increased by 2.3% to reach the total number of 50 thousand employees.

Emirates Group Annual Report 2009-2010, Ibid p.39.
Ibid p.39.

Table 5: Operating costs

2009-10 08-09 %Change 09-10% of operating costs
Jet fuel 3,242 3,933 (17.6) 29.9
Employee 1,727 1,596 8.3 15.9
Aircraft operating leases 1,119 1,034 8.3 10.3
Sales and marketing 822 904 (9.1) 7.6
Depereciation 787 585 34.6 7.2
Handling 764 689 10.8 7
In-flight catering and other operating
593 523 13.4 5.5
Overflying 391 348 12.3 3.6
Landing and parking 238 200 18.9 2.2
Aircraft maintenance 230 185 24.2 2.1
Cost of good solds 229 223 2.7 2.1
Amortisation 18 16 13.1 0.2
Corporate overheads 695 920 (24.4) 6.4
Total operating costs 10,863 11,162 -2.7 100

For the last five years Emirates was trying to reduce the jet fuel cost to improve their efficient
and be environmental friendly which they already awarded this more than once, so during 2009-
10 they made and improvement in their aircraft engines also buy new engines for some old
plane. If we look at figure 4, we can see the Jet fuel costs at US$ 3,242 million or 29.9% during
2009-10 while US$ 3,933 million or 35.2% during 2008-09. This change is not just
environmental friendly or increasing the efficiency it is also very profitable for the organization
to prove their excellence in follow the right strategy.

Emirates Group Annual Report 2009-2010, Ibid p.40.
Ibid p.40.
Figure 4: Jet fuel Costs in % during last 5 years (Source, Emirates Group Annual
Report 2009-10)

Currency and Interest Rate Risk

Any efficient organization hedge against currency risk exposures and interest rate and that is
what Emirates Airline did to take an advantage from the market movement and currency swaps,
so they continue to target a balanced portfolio approach to gain this advantage. For hedging was
around half of its interest rate and currency risk exposures, using prudent hedging solutions
including swaps and options tools. The borrowings and lease liabilities (net of cash) also aircraft
operating leases, at 31 March 2010, comprised 83% on a fixed interest rate basis with the
balance 17% on floating interest rates, while 2008-09 the fixed interest rate was comprised of
61% basis with the balance 39% on floating interest rates. Increasing one percentage point in
interest rates would increase the interest charges and the operating lease charges (net of interest
income) during the next financial year by US$ 20.1 million (2008-09: US$ 29,6 million). At 31
March 2010, Emirates borrowings and lease liabilities carried an effective interest rate of 2.5%
and (2008- 09: 3.5%). They managed their productivity in currency exposure by using prudent
hedging solutions and currency swaps, options and natural hedges through outflows
denominated in Pound sterling, Euro, Australian dollars, New Zealand dollars and Japanese yen.
For the year ended 31 March 2010, hedging coverage for Pound sterling, Euro, Australian
dollars, New Zealand dollars and Japanese yen were 14%, 24%, 29%, 81% and 91%

Emirates Group Annual Report 2009-2010, Ibid p.44.

SWOT Analysis for Emirates Airways

This part of the paper will analyse the strategic position of Emirates Airline through the use of
SWOT analysis. Based on the given case, the strategic position of the Emirates Airline
specifies their airline and aviation position has been challenged because of the changing
situations of the airline market. Rival industries of the company has been able to announced the
establishment of their business approach in the global market which offers diversity of airline
industries to cater the needs of the passengers, cargo and shipment services. The announcement
of this company affects the strategic position of the entire Emirates Airline. In order to make
sure that the company will not be left behind, Emirates Airline has been able to involve
themselves into the expansion to technological developments.
Through the use of SWOT analysis, the strategic position of Emirates Airline in 2011 will be
As a competitive and globally recognised airline industry, Emirates Airline has been able to
have strategic position in the global market. In fact, when Emirates Airline streamlined their
business, it already had the advantage of size. With several consecutive years of multibillion
profits, the company has outshined its major rival companies to become a model firm.
Emirates Airlines decision to focus on diversified market and by considering and extended the
cargo shipping and their customer service was a courageous one, and it has led to its current
position as one of the top global brands. Even upgrading the system to Emirates Contact Centers
under a contract with British Telecom Global Connect make the company more branded.
The firm has likewise been characterized by many analysts to have an ability to adapt to
changing market conditions in order to maximize profit. Listening to and identifying with
consumers has allowed Emirates Airline to construct a corporate culture that bears little
resemblance to the Emirates Airline of the past.
The ability to continuously renew and improve their service in the airline and aviation while
effectively managing the needs of their target audience is the key to maintaining Emirates
Airlines leader status and the key for succeeding in having strategic position.
Not all of diversification and approach have been successful and this can be considered as one
of the flaws or weaknesses of the company.
Analysts have accused the company of focusing too much on their high-end acquisitions and
diversification in spite of the risky effects of such decisions.

The basis for long-term competitiveness is the ability to develop continuously new generations
of more advanced airline and aviation services. Therefore one of the companys opportunities is
to tap into more markets as a result of the innovations being introduced in the aviation.
Localized capabilities enabling or even enhancing such co-operationwill always make a
difference when it comes to first-mover advantages.
The opportunity to penetrate new growth markets where internet adoption still has room to go,
Leveraging Emirates Airlines infrastructure business to get first choice and stronger position
against rivals is also an opportunity. They also have the opportunity to get ahead of their rival
companies, and this should be the case, since the said market is a potential sizeable source of
income. The trend of considering the internet market also shows cases new opportunities for the
Rival companies are major threats to the business (Gulf Air Company GSC, British Airways
Plc, Air France-KLM S.A. Deutsche Lufthansa AG, Qatar Airways Group).
Emirates Airline, in contrast, started out in other lines of business and entered and airline
capabilities of the company.
The firms inability to keep up with innovations, or recognize its demand, creates a threat for
them, a risk that they could be displaced by other industry leaders.
The legal and political environment in the countries where they operate in could potentially
affect the business negatively.
Their apparent complacence could be used by their rival companies to their advantage, and take
Emirates Airline by surprise, with the latter realizing too late that they are not the industry
leader anymore.


Lufthansa vs. Emirates
The European airline industry is a competitive and dynamic industry whose fortune is closely
linked to the performance of the overall European economy. It is impossible to conceive of the
European Union (EU) economy being able to achieve sustained growth in the future without
an improvement in the performance of an integrated transport system and air travel is an
increasingly important component within that. After examines the structure of the Emirates
airline industry and analyze the financial issues of Emirates Airlines now I will shortly describe
Lufthansa financial industry and their group overview. Which is consider one of the strongest
Emirates Airline Competitor
Lufthansa Airline Overview
Deutsche Lufthansa AG was founded in 1926 (as Deutsche Luft Hansa Aktiengesellschaft),
and re-founded in 1954.
It is the flag carrier of Germany and the largest airline in Europe in
terms of overall passengers carried. It also considers the fifth largest airline in worldwide in
terms of overall passengers carried. The airlines are operating services to 18 domestic
destinations and 183 international destinations in 78 countries across four continents Europe,
America, Asia and Africa. Together with its partners Lufthansa services around 410

Airline subsidiaries wholly owned by Lufthansa

Air Dolomiti (Italy)
Austrian Airlines (Austria).
British Midland International(UK).
Edelweiss Air(Swiss).
Germanwings, low-cost subsidiary of Eurowings (Germany).
Lufthansa Cargo, an air cargo company (Germany).
Lufthansa CityLine, a regional carrier (Germany).
Swiss International Air Lines (Basel).

PlsLory" LufLhansa Croup webslLe. hLLp:// 8eLrleved 2011/03/06.
World Alrllnes." lllghL lnLernaLlonal. Weekly news 2007/04/03 : p. 107.
LufLhansa Annual 8eporL 2009." Ma[or Subsldlarles. p. 216-221.

Other Airline subsidiaries

Brussels Airlines, Lufthansa acquired a 45% stake in the Belgian airline with an option to
acquire the remaining 55% in 2011.
Eurowings a regional carrier, 49% owned by Lufthansa.
Jade Cargo International. Lufthansa Cargo owns 25% of the company, remainder is held by
Shenzhen Airlines, which has a 51% stake, and DEG Deutsche Investitions- und
Entwicklungsgesellschaft mbH, a subsidiary of the German state-owned KfW bank with
24%. It started operations in March 2005 with intra-Asian services. It is the first cargo airline
in China with foreign ownership.
JetBlue Airways, an airline headquartered in New York, 19% owned by Lufthansa.
Lufthansa Italia, a subsidiary which operates flights from Milan Malpensa to destinations
across Europe, with a fleet of nine Airbus A319 aircraft. It is intended to capture a large slice
of the Milan market following major cutbacks by Alitalia as a result of its hub change to
Rome Fiumicino Airport.
Luxair Lufthansa holds a 13% stake.
SunExpress, airline based in Antalya, Turkey; 50% owned by Lufthansa (The remainder is
owned by Turkish Airlines).

Alliances and Partner Airlines
Alliances are fundamental to Lufthansas success. As a founding member of Star Alliance,
Lufthansa offers innumerable advantages in the worlds biggest global network. Its regional
strategy under the Lufthansa Regional brand connects Europes regions with one another and
with the world beyond. Bilateral partnerships augment and enhance the services portfolio.

Star Alliance
On May 18, 1997 Lufthansa, Air Canada, Scandinavian Airlines, Thai Airways and United
Airlines formed the Star Alliance, the world's first unilateral airline alliance. The global alliance
groups together 28 leading airlines, which offer flights to well nigh any point in the globe.

Lufthansa Regional
Under the Lufthansa Regional brand, carriers of the likes of Air Dolomiti, Augsburg Airways,
Lufthansa CityLine, Contact Air and Eurowings operate point-to-point flights across Europa as
well as connecting flights to onward international destinations on Lufthansas behalf.

LufLhansa Annual 8eporL 2009." lbld. p. 216-221.
lbld, p.6.
SLar Alllance." LufLhansa Croup. hLLp:// 8eLrleved 2011/03/06
LufLhansa 8eglonal." LufLhansa Croup. hLLp:// 8eLrleved 2011/03/06.

Codeshare Agreements
Lufthansa has bilateral cooperation accords with a host of quality airlines. The partner airlines
include Air India, Air Malta, Air Moldova, JetBlue Airways Jat Airways. Cimber Sterling,
Cirrus Airlines, Ethiopean Airlines, Luxair, Mexicana, Qatar Airways and TACA.

Lufthansa and Group Fleet
With over 722 aircraft it has the third-largest passenger airline fleet in the world when
combined with its subsidiaries (look at table 6 and 7). Groups fleet is a core operating resource
and the largest asset in the consolidated balance sheet. It stands at the centre of the value
creation process. The fleet includes aircraft from different manufacturers, principally Boeing
and Airbus. The Canadian manufacturer Bombardier and Embraer from Brazil are also
represented with larger numbers of aircraft that are deployed mainly in the Lufthansa regional

1ab|e 6 Group fleet Number of commercial aircraft and fleet orders
Manufacturer/type LH LX OS bmi 4U CLH EN EW LCAG Group fleet
Airbus A300 6 6
Airbus A310 3
Airbus A319 26 7 7 11 26 77
Airbus A320 38 23 8 10 79
Airbus A321 42 6 6 9 63
Airbus A330 15 11 1
3 30
Airbus A340 52 13 2
Airbus A380 0
Boeing 737 63 11 17 91
Boeing 747 30 30
Boeing 767 6 6
Boeing 777 4 4
Boeing MD11F 19 19
Bombardier CRJ 18
10 52 10 90
Bombardier C-Series 0
Bombardier Q-Series 20 20
14 5 24
Avro RJ 20 18 38
BAe 146 8 8
Embraer 15
17 39
Fokker F70 9 9
Fokker F100 15 15
Cessna Citation 4
Total aircraft 317 84 102 67 26 70 14 23 19 722
Note Lufthansa AG (LH), SWISS (LX), Austrian Airlines (OS), British Midland (bmi), Germanwings (4U), Lufthansa CityLine (CLH), Air Dolomiti (EN), Eurowings (EW) and
Lufthansa Cargo (LCAG) as of 31.12.2009
1) Let to Lufthansa regional airlines. 2) Let to SWISS. 3) Leased to company outside the Group.

CorporaLe lacLs." LufLhansa lnvesLor 8elaLlons. hLLp:// 8eLrleved 2011/03/06.

1able 7: Fleet Order Of Lufthansa Group

Lufthansa Group Financial Highlights
Deutsche Lufthansa AG is a global aviation group. The Group operates in five business
segments, each dedicated to high quality standards.
The five units the passenger airline business, logistics, MRO, catering and IT services
all play a leading role in the industry in which they operate. The Lufthansa Group includes a
total of more than 400 subsidiaries and associated companies.

In the year 2009 Lufthansa ended the financial year see (Figure 5) with an operating profit of
EUR 130 million (US$168 million), and achieved total operating revenue of EUR 22.3 billion
(US$28.8 billion) for the year. The five business segments play a leading role in operating
revenue and profit and they employed some 118,000 personnel at the end of 2009.

I|gure S: kevenue & Cperat|ng prof|t |n LUk m||||on (kecourse: Lufthansa annua| report 2009. .2.)

LufLhansa Annual 8eporL 2009." lbld, p. 70.
lbld. p.1-6.

Passenger Airline Group falls in passenger numbers and prices affected the traffic figures for all
the airlines in the Passenger Airline Group while Logistics Lufthansa Cargo was hit very hard
by the collapse in the airfreight market. In the main while MRO, IT Services and Catering
continued its courses of profitable growth. Despite a sharp decline in demand in Catering. It was
able to generate profit the reason was LSG Sky Chefs is the global market leader in airline
catering and also via partnerships grows in innovations and environmental awareness.
Lufthansa Passenger Airlines responded swiftly to the crisis, cutting costs and imposing a hiring
freeze. With Climb 2011 they also address structural shifts in demand patterns and aim at
improving earnings by EUR 1bn by the end of 2011. Strong financial profile with its established
financial strategy Lufthansa promotes corporate performance and safeguards it against
fluctuations in demand and on financial markets look at (Table 8: Lufthansa Group Financial


1ab|e 8: Lufthansa Group I|nanc|a| h|gh||ghts

Revenue and result 2009 2008 Change in %
Total revenue 28,811 32,120 10.3
of which traffic revenue 22,761 25,821 11.8
Operating result 168 1,655 89.8
EBIT 124 1,166 89.4
EBITDA 2,253 3,034 25.7
Net profit/loss -144 700
Key balance sheet and cash flow statement figures
Total assets 34,124 28,973 17.8
Equity ratio 23.5 28.4 5.9 pts
Net indebtedness 2,838 -161
Cash flow from operating activities 2,574 3,197 19.5
Capital expenditure (gross) 3,109 2,785 11.7
Traffic figures
Passengers thousands 76,543 70,543 8.5
Freight and mail thousand tonnes 1,712 1,915 10.6
Passenger load factor % 77.9 78.9 1.0 pts
Cargo load factor % 60.3 62.8 2.5 pts
Flights number 893,235 830,832 7.5
Average number of employees number 112,320 108,123 3.9
Employees as of 31.12. number 117,521 107,800 9.0
Note: Lufthansa Group: meaning Lufthansa airline and all Lufthansa subsidiaries and the sum of all five segments
operation (Passenger Airline Group, logistics, MRO, IT Services and Catering)

LufLhansa Annual 8eporL 2009." lbld p.144-146.

Lufthansa Group in Comparison with Competitors
With an operating profit of US$ 168m (EUR 130m), the Lufthansa Group (look at figure 6)
again takes a leading position among its competitors in 2009.

I|gure 6: Lufthansa Group w|th compet|tors 8r|t|sh A|rways and A|r Irance-kLM (Sources: Lufthansa Annua| report 2009)
In comparison with competitors, Lufthansas greater earnings stability is clearly visible. Even in
the crisis year 2009, which many airlines are closing with heavy losses, Lufthansa was able to
generate an operating profit.

Emirates Airline in Comparison with Lufthansa Group
Emirates Airline in comparison with Lufthansa special for the last year 2009 is very clear that
Emirates is the fastest growing airline in the world. Both airlines hit with the crisis from
worldwide crisis to Dubai crisis.
Comparing both companies for the financial year of 2009 (Table 9):
1ab|e 9: Compar|ng Lufthansa Group w|th Lm|rates A|r||ne
Companies comparison of 2009 Lufthansa Group Emirates Airline
Revenue US$28.8 billion US$ 11.8 billion
Operating profit US$168 million US$ 964 million

LufLhansa Annual 8eporL 2009." lbld, p.19-20.

After looking at table 9 we can see Emirates was able to return a net profit of US$ 964 million
which is five times higher than Lufthansa while Lufthansa revenue is twice higher than
Emirates airlines this is a testament to the superb response to the situation made by every area
of the business by Emirates airlines.
The important factor between both of them Lufthansa is Global aviation and it operates in 183
international destinations except the regional destinations while Emirates is international airline
and it operate in 102 international destinations without regional destinations and no alliance.
The key success for Emirates they have very modern fleet which Lufthansa Airline and
Lufthansa group didnt have yet. Emirates owning 8 aircraft of A380 and 50 on order while
Lufthansa ordering new 15 aircraft of A380. Boeing aircraft 777 300ER which reach the other
side of cost Emirates owning 52 and 19 in order, but Lufthansa doesnt have much of this
Family they just has 4 of 777 with their subsidiaries and 30 of Boeing 747 while 20 on order.

One of the most important factors between both airlines Middle East and Asia/Pacific GDP
(look at table 10) and airlines traffic estimation is growing very fast according to IATA
Emirates Airlines took that in consideration and they are very developed in Middle East Area
and they are opening two new destinations Asia/Pacific.

Emirates have very innovative strategy to respond to the markets and invest in each creative
market special of being sponsors for famous event that promoting the brand worldwide.

1ab|e 10: GD Deve|opment Iorecast 2010 to 2013.

LlmraLes Croup Annual 8eporL 2009-2010." lbld.43.
LufLhansa Annual 8eporL 2009." lbld. .31-33.



In this case study about Analysis of Luxury Airlines Emirates Airways important subjects such
as company overview, leadership team and style, alliance, aviation industry scenario, Emirates
strategy, emirates operational excellence highlights and fleet information and fleet acquisition
and financing were introduced and highlighted. In addition, overcoming recent aviation
challenges such as operational strategies, new markets and payment schemes technology,
customer satisfaction objectives and knowledge excellence of the organization were included
and illustrated. Furthermore, financial highlights, profitability, revenue, expenditure, currency
and interest rate risk of Emirates Airlines and geographical revenue in US$ Million were
shown. SWOT Analysis such as Strengths, Weaknesses, Opportunities and Threats were
introduced and analyzing lufthansa group with Emirates airlines.

In this paper I went through a short overview about the Emirates Airline describing that
company has got one of the youngest fleet in the world and one of the most developed aviation.
Looking to the awards which Emirates groups got more than 400 international awards are
making it clear to understand they are luxury aviation and very modern airline. One of the main
reason which was behind making of the Emirates Groups very success was behind the
leadership team which they had more than 23 years of experience with the company it self after
all this experience make Emirates Airlines to be proud of not having alliance comparing to other

Looking back to the aviation industry in the worldwide it was so strange to make Emirates
Airlines to keep in operation and continue of buying new fleet and developing the company

After all when I analyzed the SWOT analysis and looked at the challenge of the company of
being very active with Cargo and shipment services and passenger cater through developing
their technology and advertise their 40 brands and looking to the needs of the customers. It was
very obvious of the strengthen of the company is much stronger then the weakness of keep in
going to hire new employees and buying new plans even during Dubai crisis. Compering
Emirates with Lufthansa Group the largest airlines in terms of passenger and second largest
airline of fleet aircraft. I could say Emirates is the most innovative and the fastest airlines
growing in the world since they are 25 years old and Lufthansa 86 years old.



AED (Arab Emirates Dirham): United Arab Currency.

ASKM (Available Seat Kilometer): Passenger seat capacity measured in seats available
multiplied by the distance flown.

ATKM (Available Tone Kilometer): Overall capacity measured in tones available for carriage
of passengers and cargo load multiplied by the distance flown.

Codeshare Agreement: sometimes simply codeshare is an aviation business
arrangement where two airlines share the same flight. A seat can be purchased on one
airline but is actually operated by a cooperating airline under a different flight number or
code. The term "code" refers to the identifier used in flight schedule, generally the 2-
character IATA (International Air Transport Association) airline designator code and
flight number.

Currency Swap: A swap that involves the exchange of principal and interest in one currency
for the same in another currency. It is considered to be a foreign exchange transaction and is not
required by law to be shown on a company's balance sheet.

EBITDAR: Operating profit before depreciation, amortization and aircraft operating lease

EBITDAR Margin: EBITDAR expressed as a percentage of the sum of revenue and other
operating income.

FTKM: Cargo tonnage uplifted multiplied by the distance carried.
Hub: In air traffic a hub refers to an airlines transfer airport, a central connecting point for
different routes. Passengers and goods are transported from the original starting point to the
airports hub. From there they are carried to their destination by a second flight alongside
passengers and goods from other departure points.
IATA: International Air Transport Association the international trade association for the
airline industry.
MRO: Short for maintenance, repair and overhaul of aircraft.
Passenger-kilometer/tone-kilometer: Standard output units for air transport. A revenue
passenger-kilometer (RPK) denotes one fare-paying passenger transported one kilometer. A
revenue tone-kilometer (RTK) denotes one tone of load (passengers and/or cargo) transported
one kilometer.


EBIT: Financial indicator denoting earnings before interest and taxes.
EBITDA: Financial indicator denoting earnings before interest, taxes, depreciation and
amortization. Depreciation relates to items of property, plant and equipment and amortization to
intangible assets both terms apply equally to non-current and current assets. The figure also
includes impairment losses on equity investments accounted for under the equity method and on
assets held for sale.
Operating result: Measure of profitability denoting the operating result calculated as the result
of operating activities, adjusted for book gains and losses, write-backs of provisions, exchange
rate gains and losses on the measurement of non-current borrowing as of the reporting date and
income and expenses relating to other periods,
Traffic revenue: Revenue generated solely from flight operations. It comprises revenue from
transporting passengers and cargo as well as related ancillary services.
Group of consolidated companies: Group of subsidiaries included in a companys
consolidated financial statements.



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Safi , Abedel azez, !Anal ysi s of Luxury Ai rl i nes Emi rates Ai rways and Competi tors" #25 May,

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