Professional Documents
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Dreamliners, with 70 of the aircraft on order over the next 10 years. The risk associated with
Dreamliners is that the carbon-based materials used for the frame likely will create maintenance
costs and delays until a sufficient fleet of aircraft is placed in service. Etihad has entered into a
number of codeshare alliances with other international airlines to expand its reach, but has done so
mostly through individual agreements instead of a large, established alliance.
Qatar Airways
Qatar Airways is based in Doha and was established as the national airline of the state of Qatar
when it launched in 1997. It also is one of the worlds fastest growing airlines with one of the
youngest fleets. It is ranked among the worlds top airlines. Unlike Emirates and Etihad, Qatar is
limiting its investment in the two new long-haul, luxury A380 and 787 aircraft and instead investing
more heavily in established aircraft, with 100 Boeing 777s currently on order as its most dominant
aircraft. Qatar Airways belongs to the Oneworld codeshare alliance that consists of many leading
international airlines as a way to expand its reach as opposed to developing individual alliances
with specific airlines like Etihad.
Retail
Air Transport
Call Center
Engineering Services
Travel
See The New Jet Age, by G. Boynton, Vanity Fair, July 2014 (www.vanityfair.com)
See The New Jet Age, by G. Boynton, Vanity Fair, July 2014 (www.vanityfair.com)
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Emirates Airlines utilizes a number of sources to attain capital financing in order to obtain long-haul
aircraft and other assets; however, the airline strongly opposes the use of government subsidies
even though it is owned by the Dubai government. Instead, it emphasizes a number of sources and
strategies (i.e., own versus lease). To finance its recent Airbus A380 order, Emirates Airlines used
several sourcesexport credit agencies, various operating and finance leases, and bonds. An export
credit agency (ECA) is a private or quasi-governmental institution that acts as an intermediary
between national governments and exporters to issue export financing. In this case, the ECA offers
direct lending similar to a commercial bank. See the figure below for a breakdown by source of its
recent Airbus A380 order.
Several key sources of labor enable Emirates Airlines to offer its world-class products and services.
For instance, Emirates Airlines offers among the highest pay and benefits of any global airline to
attract the best pilots in the world capable of flying long-haul aircraft. The airlines Flight Training
Academy includes the four-year National Cadet Pilot Programme that helps participants become
among the worlds best-trained pilots. Participants of the Programme enjoy benefits such as salary,
fully funded training, comprehensive medical insurance (families included), childrens education,
annual profit sharing, federal retirement program, and interest-free construction loans. The airline
also attracts top flight attendant talent from all over the world. As an example, cabin crew delivers
on Emirates flights are fluent in numerous languages, including English, French, German, Arabic,
Spanish, Swahili, Mandarin, Italian, and Xhosa. In addition, Emirates Airlines has world-class
maintenance staff such that it offers on-site maintenance services through its dnata subsidiary to
any airline that flies into Dubai International Airport.
Strategic Partners
Alliances are business partners that substitute for business processes within a company when
insufficient resources or expertise exists (or is cost prohibitive) within the company to best achieve
its strategic objectives. When engaging strategic partners, companies receive the benefit of the
partners strengths but also with the cost of sharing returns and being subject to their risks. For
example, Emirates Airlines partners with other premium airlines (e.g., Qantas Airlines) to give them
seamless flights when customers fly in and out of airports not served by the airline.
Key Internal Business Processes
A business process is a collection of related activities that connect inputs (resources, human capital,
and supplier/alliance resources) to outputs (products and services) in key areas within the
organization. Below is a list of important business processes within Emirates Airlines organizational
model. These chains of activities are sought to create a competitive positioning for Emirates Airlines
within the market. Further, a majority of accounting transactions occur within business processes in
the form of revenues, expenses, and asset acquisitions.
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the airline. Each A380 initially costs US$ 400 million and the long-term costs for upgrades and
maintenance are significant. On average, Emirates Airlines tries to sell aircraft once they reach 10
years of age, because there is a secondary market for its planes and these sales helps it avoid the
long-term maintenance costs that spike as the planes age. In addition, this approach enables the
airline to have access to cutting age technology in new aircraft.
Passenger Services
Emirates Airlines strives to provide serviceboth on the ground and in the airsuch that
passengers enjoy a flawless experience when traveling. Passenger services is the process of
understanding and meeting passenger expectations for premium services. At Emirates Airlines, key
elements of ground passenger services include check-in and boarding gates, first- and
business-class lounges, and transfer desks. Cabin crew operations and service delivery necessary for
flawless in-flight passenger services include cabin crew management, cabin crew training, catering
management, and product development and duty-free services.
Flight Operations and Network Management
As one of the largest components of Emirates Airlines business, the operation of aircrafts and
management of flight routes are essential to company success and long run viability. A primary goal
is to use Airbus A380 aircraft instead of Boeing 777 planes when feasible (and the planes are full)
because each A380 carries 100 more passengers, but consumes 25 percent less fuel. Network
management consists of the operation, administration, and maintenance of all aspects of flying in
and out of airports to move passengers and cargo from one destination to another. One example of
network management involves helping to ensure that each flight has necessary pilots and crew
members given complex flight patterns and restrictions on the number of hours that personnel and
aircraft can be in the air. Another example of a critical network operation for Emirates Airlines is
maintaining schedule integrity at times when there is disruption (delays, diversions, rerouting,
cancellations, etc.). Disruptions occur for a myriad of reasons, including weather, air traffic,
disabled aircraft blocking runways, and closed airspace for VIP state visits. All major stakeholders
within the airline are represented to improve the speed and quality of recovery decisions.
Effectiveness at network management is a critical component for customer satisfaction, particularly
for a luxury airline.
Financial Management and Accounting
Given the importance of its brand value and strategy to achieve consistent financial results over the
long-term, Emirates Airlines must dedicate significant expertise and resources so that it manages
the challenging process of measuring and managing an international airline. Historically, the airline
industry has faced many challenges to long-term sustainability as a result of mismanagement of
high capital and operating costs, stringent regulations, fierce competition, evasive customer loyalty,
and external forces such as fuel costs and other sociopolitical and environmental events. Emirates
Airlines tries to use the strategy of purchasing versus leasing aircraft at a rate of about 50/50 to
hedge the risk of owning too many aircrafts. As a rule of thumb, if Emirates Airlines can fill the
economy class section of A380, it will cover all operating costs. Accordingly, passengers seated in
business and first classes enable the flight to generate profits. For example, breakeven occurs at
approximately 70 percent capacity for the Dubai to New York City A380 flight. IATA reports that,
worldwide, airlines in 2014 earned an average of 2.6 percent profit margin per passenger (e.g., for a
$226 average ticket price, there were $220 in costs).
External Forces
External forces are exogenous factors that impact Emirates Airlines and largely are outside of its
control. As addressed in the previous case, the airline industry is highly volatile and involves many
diverse external forces. Understanding, monitoring, and responding to these forces help airlines
identify and manage risks and exploit opportunities, which is critical for achieving strategic
objectives. Below are key external forces Emirates Airlines faces:
Social
Market-driven and demographic trends associated with a variety of factors, such as globalization,
can lead to an increased and/or decreased use of premium airline travel for personal or business
reasons. Issues such as economic downturns, social instability (e.g., wars and protests), pandemics,
and terrorism could cause ticket sales to fall for Emirates Airlines because travelers are less inclined
to pay high premiums to travel. As global demographics shift, a number of Asian and South
American countries are becoming wealthier, working age individuals are making more trips, and
emerging market populations are becoming much younger. The result is the trend in cost of air
travel is moving downward.
Political
The political environment, including laws and regulations, greatly impact Emirates Airlines such that
it must monitor conditions and work with government officials when new or threatened regulations
arise. For example, Emirates Airlines opposes governmental subsidies and believes that
governments should not provide injections, borrowings, or financing to airlines, regardless of
shareholder status. In addition to this positioning, Emirates Airlines believes governments should
pursue liberalization and open skies with the objective to end aeropolitical protection. However, as
Emirates Airlines continues to expand its global reach, it will have to cope with a variety of political
issues. According to the IATA, the number of passengers is expected to double between 2014 and
2034, with most growth expected in the United States and China. However, this number could be
affected significantly in either direction should governments allow more airlines to use their
airspace or alternatively close their airspace. The risk of closing airspace is significantfor example,
according to IATA, there were nearly 500 protectionist measures taken by a large number of
countries in 2012.
Technical
Enhancement in technology can lead to a variety of changes that impact Emirates Airlines. In the
past decade, enhancements in teleconferencing have decreased demand in business travel. On the
contrary, technological advancements have enabled airlines to incorporate innovative technology
into aircraft infrastructure. Current innovation has increased the number of consumer amenities,
lighter aircrafts, enhanced fuel efficiencies, and reduction in operating costs.
Environment
As implied under the technical category, much of today's aircraft innovation has revolved around
reducing an entity's carbon footprint and increasing fuel efficiency. For example, Boeings
Dreamliner 787 is a highly efficient aircraft with a frame comprising a light but strong composite
material, thereby resulting in an improved passenger experience (e.g., smoother ride, higher quality
cabin air) and greatly enhanced fuel efficiency. Such efficiency is important because projections for
fuel prices predict that they will remain high over the long run.
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Competitors
Competitors are other businesses in the market that compete with the company at hand. Emirates
Airlines competes against a variety of other luxury airlines, budget airlines, or other modes of
transportation, which can be categorized as follows:
Direct
Airlines that compete directly with Emirates Airlines include such luxury airlines as ANA All Nippon
Airways, British Airways, Cathay Pacific, Etihad Airways, Lufthansa, Qatar Airways, Singapore
Airlines, and Turkish Airlines. These airlines seek to provide passengers with similar premium air
travel. Etihad now offers daily A380 flights to London Heathrow that are equipped with several
three-room state-of-the-art private suites that include a living room, bathroom with shower,
bedroom, and personal butler.
Indirect
Indirect competitors compete with Emirates Airlines either as a nonluxury or discount-oriented
airline option (e.g., Ryanair, United, Alitalia) or an alternate luxury form of transportation (e.g.,
cruise ship or passenger train). Upon a change in consumer preferences or market environment,
Emirates Airlines will have to mold its competitive strategy to better compete against such modes
of transportation. Such organizational changes will help Emirates Airlines secure a strong position in
the market.
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Financial Reports
Exhibit 4
Emirates Airlines Consolidated Income Statement
AED = United Arab Emirates Dirham (equivalent to US$ 0.27 as of January 2015) for all financial statements.
Explanations of notes on all financial statements are available on Emirates Air Financial statements
(www.emirates.com).
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Exhibit 5
Emirates Airlines Consolidated Statement of Financial Position
Exhibit 6
Emirates Airlines Consolidated Statement of Cash Flows
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Exhibit 7
Ten-year Summary of Key Emirates Airlines Operating Metrics
Triple-bottom-line-based Disclosures
Increasingly, organizations supplement financial statements and reports with nonfinancial
disclosures across various aspects of the business of interest to key stakeholders (customers,
employees, investors, suppliers, regulators, etc.). The majority of these disclosures can be
categorized according to a triple-bottom-line characterization: economic, environmental, and social
variables. These triple-bottom-line factors are measured using key performance indicators (KPIs)
that should link to strategic objectives and eventually to some type of shareholder value measure.
Exhibit 8 describes common airline KPIs for the airline industry.
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Exhibit 8
Key Performance Indicators for the Airline Industry
Economic
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Exhibit 9
Corporate Responsibility Report
At the Emirates Airlines Group, we place great value on corporate citizenship and
social responsibility and believe our business ethics are integral to our continued
success.
Each member of staffs commitment towards ongoing improvement combines to maintain the
competitive edge of our operation in global markets.
We firmly believe our employees are our greatest asset and their contribution to the
staggering pace at which we have developed cannot be underestimated.
Without them it would not have been possible and we acknowledge this with a range of
excellent benefits, including a generous profit share scheme, and programmes designed to
help them fulfill their career goals.
These principles enable us to attract employees of the highest caliber and have helped us
become the largest employer in the UAE. We now have a team of more than 62,000 loyal
workers, many living far away from their own families, and we are committed to caring for
them within ours.
This dedication to the welfare of our employees does not distract from the fundamental
economic role of our businessto reward stakeholders. While rivals have faltered under the
strain of fluctuating fuel prices and the intense level of competition synonymous with our
industry, we have posted profits in all but one year of our history.
While we are focused on maximizing profit margins, as a leader in aviation innovation, we
are devoted to growing our business while using fewer resources and creating less waste and
pollution.
The billions of dollars we have invested in purchasing the most advanced aircraft in
production mean we operate one of the youngest and most eco-efficient fleets in the world.
Our commitment to the environment extends to our interests on the ground. We take great
pride in our involvement with the Dubai Desert Conservation Reserve, which is dedicated to
preserving the natural and cultural heritage of area.
The National Park, the largest protected area in the UAE and home to more than 30 species
indigenous to the Arabian Peninsula, is considered the regional benchmark for sustainable
development and conservation.
Our green projects do not stop at homein Australia, we have created one of the worlds
most eco-friendly conservation-based destinations, Wolgan Valley Resort & Spa.
Source: http://www.theEmirates Airlinesgroup.com/english/our-vision-values/our-vision-values.aspx
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Exhibit 10
Emirates Airlines Environmental Performance Report
Exhibit 11
Emirates Airlines Fuel Efficiency Report
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