EMIRATES AIRLINES



EMIRATES AIRLINES

Michael V. Blumeyer

12/9/2015

Author Notes:

Prepared with MBA Aces with Blumeyer

Contents

Abstract…………………………………………………………………………………………...3

Introduction……………………………………………………………………………….…........3

History……………………………………………………………………………………………4

Corporate Social Responsibility………………………………………………………………….4

SWOT Analysis………………………………………………………………………..…….........5

Emirates Airlines: +5 Year Projections: Income Statement…………………………….................7

Emirates Airlines: : +5 Year Projections: Balance Sheet………………………………………….8

Airport Expansion Proposal………………………………………………………….……………8

Metro Airport……………………………………………………………………………………...9

Sky Harbor Airport……………………………………………………………………………….11

Miami Airport……………………………………………………………………………………12

San Diego International Airport…………………………………………………………….........13

Orlando Airport…………………………………………………………………………………..14

Boise Airport………………………………………………………………………………..........15

Denver……………………………………………………………………………………………16

Indianapolis Airport………………………………………………………………………….......17

Philadelphia Airport……………………………………………………………………………..18

McCarran Airport………………………………………………………………………………..19

Conclusion………………………………………………………………………………..……...19

References……………………………………………………………………………………….20

Abstract

The marketing plan of Emirates Airlines gave insight regarding a brief history of the company, followed by an in-depth marketing analysis and expansion proposal. Research from credible online sources and accurate data from use of the Bloomberg Terminal helped us seek out the best airports that would be most congruent with augmenting the operating revenues of Emirates Airlines. We have underscored that in order for the firm to maximize its position in the growing airline industry, it must expand with this optimal solution. Finally, we have concluded with revealing the total amount of revenue potential if Emirates Airlines did indeed decide to expand its marketing and operations.

Introduction

The proposed topic for the marketing plan will be Emirates Airlines and the flight service they provide. Specifically, the airports of where Emirates Airlines provide service in the United States and also a marketing strategy. First, we will briefly talk about the history of this airline. Then, we will analyze and research the business aspect of Emirates Airlines’ current airports to which they serve and how we are able to improve the sales for the airline by expanding accessibility to ten more airports in the United States for passengers. Next, we will put together a SWOT analysis, identify key marketing objectives, and create some action items. Then, we will delineate a financial statement analysis that will reveal the urgency and importance to implement my recommended marketing strategy for Emirates Airlines. Finally, we will conclude by forming goals and strategies to recommend for the airline implement to increase their passenger flow as well as increase their marketability in the United States. My overall goal is to create a proposal to improve Emirates Airlines’ free cash flow by showing them how they can craft execute the marketing strategy that is offered, which will expand their services to more airport in the United States.

HISTORY

Emirates Airlines began in 1985 with a flight from Dubai to Karachi using a leased A300 Airbus with the leadership of Mr. Flanagan’s capital of $10 million. Preceding the launch of Emirates was the creation of a ground handling services provider known as dnata, which began in 1959. After the following years of striving for a slot in an international airport, the company achieved an opportunity to being its international operations in 1991, located in the Heathrow Airport in London, England.

The firm began to augment its progress throughout the 1990s by becoming the first airline to introduce telecommunications on an Airbus, in all three classes. This innovation paved the foundation for the firm to be more well-known as something more than just another flight. Following the years up to 2001, Emirates grew a workforce, accumulating 11,000 employees, purchased another six Boeing 777-300s, and even crafted and executed its powerful marketing strategy by signing a £24 million deal by sponsoring English Premiership football club, Chelsea, for four years (Emirates Airlines Website, 2015).

Following the September 11th attack, the demand to fly and travel drastically froze, causing cargo to also slump by 9%. In just the next two years, however, demand robustly recovered and Emirates grew a total workforce of 25,000, signed an agreement for 10 Boeing 747-8Fs in a $3.3 billion deal, and impressed the world by managing its operations at its new $120 million facility at Dubai International.

Corporate Social Responsibility

Emirates Airlines conducts business by adhering to its integrity regarding its corporate social responsibility. One of the most vital components in which Emirates implements to enhance the environment is to confirm that engine types the company uses are provided directly from the ICAO engine databank. These emission margins to mitigate oxides of nitrogen (NOx) and carbon monoxide (CO) are dealt with great detail (Emirates Airlines Website, 2015).

Perhaps what is most prominent is to mitigate fuel exhaust when fuel jettison events must occur. It is in this situation that the firm has Flight Crew Air Safety Report (ASR) is reported by the Flight Crew to Emirates Group Safety.

SWOT Analysis

Strengths

As a fierce competitor that is well-known in the airline industry across the globe, Emirates Airline been able to strategically position themselves in the global market. Specifically, the firm is utilizing the prodigious size of its connections to other international airports, as well as executing its marketing strategy by associating the Emirates brand with international sports teams (Safi, Amal, 2011).

Emirates Airlines has been reported by analysts to have the ability to stay flexible in times of booms and busts, having proven its persistence and innovative thinking. For example, after the September 11th Event in 2001, Emirates networked and invested in an Engineering building. In times of burgeoning, the firm worked hard to accumulate its workforce and to finalize deals in airports to capture an entirely new demographic of customers (Safi, Amal, 2011).

Weaknesses

Emirates Airlines possess a risk factor of the costs of fuel, if it were to increase. The price of oil has fluctuated wildly throughout 2015 and this factor creates uncertainty for shareholders (Corneau, Stacy, 2013).

Opportunities

The firm one of the most aggressive management teams in identifying and capturing opportunities, both in terms of applying innovation by becoming the first to install TVs in its aircrafts, to seeking out ways to expand its aircraft operations in markets that possess risk and could instantly present external threats. Operating revenues is probably the most prominent opportunity for Emirates Airlines because the firm has proven great use of employee service and proven consistent financial ratios related to revenues in the last three years (Bloomberg, 2015). Another opportunity for Emirates is positioning by structuring the firm in new locations that offer new demographics, with emphasis on considering expanding its demographics by marketing toward the Asian audience.

Threats

One of the biggest threats for Emirates Airlines is the high degree of uncertainty from external threats. In 2013, the Ebola outbreak created global shock and, as a precaution, the demand from travelers decreased (Smith, Matt, 2014).

Emirates Airlines +5 Year Projections: Statement of Income

[pic]

(Bloomberg, 2015)

Emirates Airlines +5 Year Projections: Comparative Balance Sheet

[pic]

(Bloomberg, 2015)

Airport Expansion Proposal

The business proposal follows consists of identifying 10 airports that have the greatest probability, in terms of both qualitative and quantitative factors, that would augment sustainable growth for Emirates Airlines. The airports that we believe should be expanded are as follows: Metro International Airport, Sky Harbor, Miami Airport, Denver Airport, San Diego International Airport, Orlando Airport, Boise Airport, Indiana Airport, Philadelphia Airport, and McCarran Airport.

In researching and analyzing the decision that should be made regarding whether or not to expand in alliance with these airports, I have supported my data with annual reports which include the increase or decrease in the quantities of passengers, the anticipated changes in price of oil, any approved funding from the city, and the competitive advantages that complement both the growth and brand loyalty for Emirates Airlines.

Detroit Metro Airport

Emirates Airlines should expand their operations at the Metro Airport, based in Romulus, Michigan. According to the Detroit Regional Chamber, the Air Trade Area as approximately 300,000 existing businesses that include 20 Fortune 500 companies (WCAA, B-7). In addition to the productively entrenched puissance of companies, the technology sector is a directly growing contributor to the Air Trade Area’s recovery. This is congruent with Emirate Airlines’ flexibility in being able to rebound from systemic risk in the past, due to the September 11th Event. The market is another imperative factor to cater to because the Metro Airport is one of Delta’s largest gateways for Asian operations. This creates an opportunity to network deeply with the Asian demographic, but also is locally positioned for flights to serve destinations around Canada and the Arctic Circle (WCAA, 2014).

|(in thousands) | | | |

|  |12 |13 |14 |

|Domestic Passengers |2,187 |2,350 |2,329 |

|International Passengers |227 |245 |232 |

|Total Passengers |2,415 |2,595 |2,560 |

|  |  |  |  |

|Air Freight |36,866 |35,464 |33,824 |

|Small Packages |3 |21 |0.4 |

|Air Mail |2,654 |36,739 |3,174 |

|Total Cargo |39,523 |72,224 |36,998 |

The table above delineates the burgeoning amount of passengers that have conducted business with flying at the Metro Airport. We see that Domestic Passenger has remained above at least 2 million, with the quantity of total passengers sustaining their figures above the 2.4 million mark. There are no drastic changes in the volatility of these passengers (WCAA, 2014). It is also critical to take into account the total cargo, however, which has fluctuated, but fortuitously resulted to be only 36 million in 2014.

Funding is a positive indicator that compounds the reason to conduct operations here. In analyzing the Detroit Metropolitan Airport Fund Income Statement, we see that because of approved funding by the city, the change in revenues increased by $305 million (WCAA, E-5).

Perhaps one of the only biggest risks to take into account is the increase in the landing fees, which increased 4.6% at the end of the 2014 Fiscal Year.

In conclusion, Emirates Airlines should take immediate action to solidify a position at the Metro Airport and expand operations as quickly as possible. The outlook for the airport currently assumes a 3.0% growth in total non-airline revenues (WCAA, J-7).

[pic]

(WCAA, 2014, J-9)

The chart above shows the airport’s slowly, but consistent positive annual results. If Emirates Airlines entered and conducted their business, the firm’s revenues could easily obtain a 13% growth in revenues within the next 5 years. This is a conservative conclusion, due to virtually all of the positive financial ratios from Emirate Airlines, but also due to the tenacity and great cohesiveness in corporate management to constantly improve growth. Lastly, the colossal opportunity to tap into the Asian demographic could create even more revenues, with the hopes of beating this conservative outlook of a 13% growth-rate by the next 5 years (WCAA, 2014). We forecast that Emirates Airlines will make an accumulated $132,000 in the next 5 years.

Phoenix Sky Harbor International Airport

The Phoenix Sky Harbor International Airport is a great option to expand operations. With a consistent flow of approximately 40 million passengers per year, this airport is a popular tourist destination with attractions that feature spas, results, professional sports, golf, restaurants, and nightlife (PHX Annual Financial Report, 2014).

Some of the highlights from the Fiscal Year of 2014 for Sky Harbor boast that operating revenues increased by $20.4 million to $326.0 million (Phoenix, Arizona, Annual Financial Report, 2014). This impeccable accomplishment of maintaining value in a location in which the changes in weather could seem to deter the volume of consumers proves that customers really value this airport.

|(in thousands) |13 |14 |

|Cash Flow from Operating Activities |$309,407 |$325,320 |

| Receipts from Customers |(171,617) |(169,123) |

| Payments to Suppliers |(72,894) |(74,194) |

| Payments to Employees |(6,869) |(7,262) |

| Payment of Staff and Administrative Expenses |$58,027 |$74,741 |

(Sky Harbor, 2014, p.32)

The chart above denotes that now is the time to urgently expand operations into Phoenix. The inflows from cash have resulted in a 5.1% positive inflow of cash. This opportunity to capitalize and grow in a location that possesses a copious source of cash is a paramount reason for expansion.

If Emirates Airlines took only 1% from the inflows of cash, the firm would profit in the next 5 years through this profitable decision by gaining a 5% increase in cash from operating activities. We forecast that Emirates Airlines will make an accumulated $80,000 in the next 5 years.

Miami Airport

Emirates Airlines should expand their operations in alliance with the Miami Airport. In 2014, MIA (Miami Airport) earned a 1.7% increase of enplaned passenger customers.

|(in thousands) |12 |13 |14 |

|Enplanements |$19,684 |$19,878 |$20,220 |

|Landed weight (1,000 pounds) |33,548 |34,438 |35,299 |

|Enplaned cargo (in tons) |988 |968 |998 |

(Miami-Dade Aviation Department, September, 2014)

The chart above shows the sustaining quantitative opportunity for the firm. The 1.7% increase is a result in only one fiscal year. In 5 years, this would amount to be an 8.5% increase. Thus, it is safe to state that within 5 fiscal years, the gains that could be easily earned could beat the 8.5% 5-year growth outlook. We forecast that Emirates Airlines will make an accumulated $219 million in the next 5 years.

San Diego International Airport

The San Diego Airport based in San Diego, CA is the next place that Emirates Airlines should urgently expand its operations if it wants to capitalize on making a very profitable decision.

The pie chart above shows the positive areas in which Emirates Airlines can easily profit in the next few years. Knowing that the demographics of Emirates Airlines enjoy bars and a relaxing environment, San Diego is the pith of these values and also presents an opportunity in further expanding operating revenues via attracting the locals in San Diego (San Diego Country Regional Airport Authority, June, 2013).

[pic]

(San Diego Annual Report, 2013)

Congruent with the pie chart above, the operating revenues increased from 2011 to 2012 by 6% and 2012 to 2013 by 15%. In addition, the economy is not in a recessive state and annual reports are still disclosing positive and impressive earnings. Thus, I strongly conclude that if Emirates Airlines expanded into San Diego, the firm would profit in the next 5 years by taking only 25% of these profits, it would achieve an annual increase of 3.75%. This sums to a total of 18.75% in the next 5 fiscal years for the eminent airlines company. We forecast that Emirates Airlines will make an accumulated $8.6 million in the next 5 years.

Orlando

There is an outstanding opportunity to profit by expanding operation into the Orlando International Airport for one major key reason: profitable operating revenues.

[pic]

(Finance Department of Orlando, Comprehensive Annual Report, 2014)

As we see from the table above, total operating revenues increased from 2012 to 2014 from $366 million to just below $400 million. The annual increase in terms of percentages results in Orlando to earn an increase of 5% (Finance Department of Orlando, Comprehensive Annual Report, 2014).

Florida is an optimal location for expansion and will greatly enhance attraction for Emirates Airlines. Real estate, although not directly related to the airlines industry, presented a tempting possibility for business owners to at least explore. If Emirates Airlines expanded to Orlando, we could easily see operating expenses increase in the next 5 years by at least 5%. We forecast that Emirates Airlines will make an accumulated $5.2 million in the next 5 years.

Boise Airport

Boise Idaho is my final, but very adamant recommendation for expanding operations. Please see the chart below to view proven growth in its operating revenues from 2013 to 2014.

[pic]

(City of Boise, Idaho, Comprehensive Annual Financial Report, 2014)

We see that as operating revenues, due to our growing economy and robust airline industry, Boise Airport is expected to continue to grow. This airport is a great central location for customers to conduct and expand operations, but more importantly, it is an optimal location to deepen networks and expand operations and marketing. The percentage change from 2013 to 2014 was 3.5% (Boise Airport, February, 2013).

I adamantly recommend that Emirates Airlines take immediate action in profiting from this opportunity. From a conservative outlook, if Emirates Airlines was able to only profit from 25% of this annual percentage increase in operating revenues, the firm would stand to make an annual increase of 0.88%. In 5 year, Emirates Airlines would easily profit an accumulated increase of 4.38%. We forecast that Emirates Airlines will make an accumulated $18.9 million in the next 5 years.

Denver Airport

Denver Airport is a great opportunity for Emirates Airlines to solidify a deal and expand. The airport has earned operating revenues annually of 5% in 2013 and a 7% increase in 2014. Please see the table below as follows:

[pic]

(City and County of Denver Municipal Airport System, 2014, p. 16)

As we see from the table above, there is a consistent increase, which would complement Emirates Airlines, if the firm decided to take this action. We forecast that Emirates Airlines will make an accumulated $704 thousand in the next 5 years.

Indianapolis Airport

Expanding to Indianapolis would be a great decision. Indianapolis offers consistent growth for its passengers. Please see the table as follows:

[pic]

(Annual Financial Report, 2014, p. 12)

In the annual data, operating revenues only increased by 1%. The location, however, presents a great foundational marketing location to expand into multiple demographics and position the firm in a great location to improve its operational revenues in a location that has already established a high-flow of business.

Philadelphia Airport

The Philadelphia Airport possesses an opportunity to grow revenues on an annual basis. Please see the table as follows:

[pic]

(City of Philadelphia Aviation Fund, 2014, p. 23)

As we see from the table above, the airport earned by the increase in its operating revenues by 8.3% in just one fiscal year. This offers Emirates Airlines to capitalize on growth and leverage its business in an appropriate way that fits well with its aggressive mission and standards.

McCarran Airport

McCarran Airport offers a great opportunity to expand operations. Please see the table as follows:

[pic]

(McCarran International Airport, 2014. )

Emirates Airlines must take urgent action if it wants to maximize its revenues and also secure a position in Las Vegas.

Conclusion

The marketing plan that has been proposed for Emirates Airlines underscores the strengths and opportunities that are currently available for the company to immediately expand its operational revenues. From the 10 airports that have been proposed in this plan, the cumulative potential that can be offered in the next 5 years accumulates to be a total of $2.9 million. This resulted in a conservative outlook, allowing Emirates Airlines to gain 10% of operating revenues.

References

Riley, Lorne (June, 2011). Oxford Economics report on why Dubai’s aviation model works. Retrieved by:

Gulf Business (May 2013). Emirates airline profit up 52%. Retrieved by:

Emirates Airlines Website. (2015). History: the milestones in Emirates’ incredible journey. Retrieved by:

Safi, Abedelazez J Amal (May, 2011). Analysis of Luxury Airlines Emirates Airways and Competitors. Retrieved by:

Emirates Airlines Website (2015). Responsibility: our culture of respect. Retrieved by:

Reuters, Dubai (November, 2013). Fuel costs, currency moves hit Emirates Airlines’ profit. Retrieved by:

Corneau, Stacy (December, 2013). SWOT analysis on Emirates Airlines. Retrieved by:

Smith, Matt (October, 2014). Emirates president says Ebola hits Asian demand for Africa flights. Retrieved by:

Bloomberg Terminal (December, 2015). Financial Statements. Retrieved by: 1000UZ ,

Detroit Metropolitan Airport, (December, 2014). Airport statistics. Retrieved by: (CY)_Final_2014.pdf

Naughton, Thomas and Teifer, Terry (December, 2015). Wayne County Airport Authority Fiscal Year 2015 Approved Budget. Retrieved by:

City of Phoenix. Arizona (June, 2014). Annual financial report for the year ended June 30, 2014. Retrieved by:

Miami-Dade Aviation Department (September, 2014). Comprehensive annual financial report of 2014. Retrieved by:

San Diego Country Regional Airport Authority (June, 2013). Annual report for the fiscal year ended June 30, 2013. Retrieved by:

Finance Department of Orlando (September, 2014). Comprehensive annual financial report for the years ended September 30, 2014 and 2013. Retrieved by:

Boise Airport (February, 2013). Boise airport ACDBE program. Retrieved by:

Indiana Airport Authority (December, 2014). Comprehensive annual financial report. Retrieved by:

Philadelphia Airport System (June, 2014). Municipal securities disclosure annual financial information. Retrieved by:

City and County of Denver Municipal Airport System, (2014). Annual financial statement. Retrieved by:

Domestic Flights (December, 2014). 2014 comprehensive annual financial report. Retrieved by:

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