Profit Warning

May 05, 2007 (LBO) – Emirates, which owns 40 percent of SriLankan Airlines has warned its main shareholder, the Dubai government, that profits of the South Asian associate will fall in 2007. “SriLankan faces another difficult year ahead and unless a solution is found to the ongoing security situation, there may not be a significant improvement in visitor arrivals to Sri Lanka, which will impact negatively on yields and airline profitability,” Emirates said in its recently released annual report.

Emirates said in the 2006 financial year passenger revenues at its associate airline grew 9 percent and cargo revenues 17 percent, though profits did not grow as much.

“As projected, SriLankan Airlines experienced another year of difficult trading conditions, with continuing high fuel prices and a deteriorating security situation in the country, resulting in reduced visitor arrivals,” Emirates said.

“The planned expansion of the use of Colombo as a hub for both passenger and cargo traffic to and from south Asia, saw revenues grow by 9 per cent and 17 per cent respectively over the previous year.

“Such improvements, however, were not reflected in the bottom line due to the escalat

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