Sample Answer (Preview)
The following is a partial sample answer showing the approach, structure and referencing expected for this brief. It covers approximately 25–30% of the full 4,000–4,500-word group report, using Emirates as the chosen airline. Sources are cited in Harvard style.
1. Introduction
This report conducts an economic, financial and commercial assessment of Emirates, the Dubai-based international airline and the larger of the two businesses in the Emirates Group. Emirates was chosen for two reasons. First, it publishes audited financial statements and detailed operating statistics every year, which makes the financial analysis required for LO2 possible. Second, its hub at Dubai International (DXB) makes it a clear example of how government policy, the freedoms of the air and fleet strategy combine to produce profitability (O’Connell, 2011). The analysis draws on the Emirates Group Annual Report 2025-26, which covers the year to 31 March 2026, together with academic work on airline economics (Belobaba, Odoni and Barnhart, 2015; Doganis, 2019). The report first describes the organisation of the airline industry and Emirates’ place in it. It then applies macroeconomic and PESTLE analysis, assesses the financial statements and develops a profitable profile for the airline.
2. Company profile and position in the global airline industry
Emirates was set up by the Government of Dubai in 1985 and is wholly owned by the Investment Corporation of Dubai, the emirate’s investment arm (Emirates Group, 2026). It is not listed on a stock exchange, so it funds growth from retained profits and from debt and lease financing rather than by issuing shares. This matters for the fund-raising analysis later in the report.
The global airline industry is organised around three broad business models: network carriers that feed long-haul flights through hubs, low-cost carriers that fly point to point, and hybrid carriers that combine features of both (Doganis, 2019). Emirates is a network carrier, but its hub-and-spoke system differs from those of European and North American legacy airlines in one important way. Its home market is small, so most of its passengers are not travelling to or from Dubai. Instead, they connect there between two other regions, for example between Europe and South Asia or between Europe and Australia (O’Connell, 2011). Its all-widebody fleet of Airbus A380, Airbus A350 and Boeing 777 aircraft is designed for this role. At 31 March 2026 Emirates operated 277 aircraft and had 367 more on order, with deliveries scheduled to 2038 (Emirates Group, 2026).
Emirates also stands outside the three global alliances. It extends its reach through bilateral partnerships instead: at 31 March 2026 it had 32 codeshare, 117 interline and 15 multimodal partners, giving customers access to more than 1,700 destinations (Emirates Group, 2026). On the partnership ladder this places Emirates at the lower, more flexible rungs of interline and codeshare agreements, which lets it choose partners route by route while keeping full control of its hub and its brand.
Table 1: Emirates key performance indicators, 2025-26 and 2024-25
|
Indicator
|
2025-26
|
2024-25
|
Change
|
|
Revenue
|
AED 130.9bn
|
AED 127.9bn
|
+2%
|
|
Profit before tax
|
AED 22.8bn
|
AED 21.2bn
|
+7%
|
|
Profit before tax margin
|
17.4%
|
16.5%
|
+0.9 pt
|
|
Profit after tax
|
AED 19.7bn
|
AED 19.1bn
|
+3%
|
|
Cash assets
|
AED 54.9bn
|
AED 49.7bn
|
+10%
|
|
Passengers carried
|
53.2m
|
53.7m
|
−1%
|
|
Passenger seat factor
|
78.4%
|
78.9%
|
−0.5 pt
|
|
Aircraft in fleet
|
277
|
260
|
+17
|
Source: Emirates Group (2026).
Table 1 shows that the record profit in 2025-26 came from price rather than volume. Passenger numbers fell by 1% and the seat factor slipped by 0.5 percentage points, yet profit before tax rose by 7%. Passenger yield rose by 4% to 38.1 fils per revenue passenger kilometre, and the annual report credits lower fuel costs and strong customer preference for its product (Emirates Group, 2026). The difference between yield-led and traffic-led growth is central to the profitable-profile analysis later in the report, because yield gains are harder to keep once competitors add capacity on the same routes (Doganis, 2019).
3. Macroeconomic and PESTLE analysis
The PESTLE framework is used here to assess the external factors that affect Emirates. As the brief requires, particular attention is given to government policy, the open skies policy and the freedoms of the air.
3.1 Political factors: government policy, open skies and the freedoms of the air
Political factors are the most important influence on Emirates’ business model. International air services are governed by bilateral air services agreements between governments, and the traffic rights that airlines may use are described as the freedoms of the air (Doganis, 2019). The third and fourth freedoms allow an airline to carry passengers between its home country and another country. Emirates’ connecting model depends in practice on what is often called the sixth freedom, which means carrying passengers between two foreign countries via its home hub by combining third- and fourth-freedom rights (O’Connell, 2011). Dubai has followed a liberal, open-skies aviation policy, seeking wide traffic rights for its airline and opening its own airport to foreign carriers, because aviation is a central part of its strategy to diversify the economy away from oil (O’Connell, 2011; Vespermann, Wald and Gleich, 2008).
This policy creates both an opportunity and a threat. It has allowed Emirates to build a global network from a very small home market. However, it also leaves the airline dependent on bilateral agreements that other governments must agree to. Incumbent carriers in Europe and North America have pressed their governments to limit the growth of Gulf carriers, arguing that they compete unfairly (Vespermann, Wald and Gleich, 2008). Where a foreign government declines to grant extra frequencies or destinations, Emirates cannot add capacity even when demand exists. Geopolitical risk is also high. The 2025-26 annual report records that military activity from 28 February 2026 massively disrupted commercial air traffic in the Gulf region, including the UAE, at the end of an otherwise record year (Emirates Group, 2026). A hub carrier that relies on connecting traffic through one airport is especially exposed to this kind of disruption, because it has no second hub to which it can move passenger flows.
3.2 Economic factors
Demand for air travel rises with income, so Emirates benefits from economic growth and an expanding middle class in its main markets in South Asia, Africa and the Far East. Demand for premium cabins depends heavily on business confidence, while leisure demand is more sensitive to price (Doganis, 2019). On the cost side, fuel is one of the largest operating costs for a long-haul airline, and lower fuel costs helped to lift profit in 2025-26 (Emirates Group, 2026). Exchange rates also matter, because Emirates earns revenue in many currencies but reports in UAE dirhams, which are pegged to the US dollar. In 2025-26 currency movements in its main markets added AED 332 million to profit (Emirates Group, 2026). Strong profits have also given Emirates a large cash buffer of AED 54.9 billion, which reduces its exposure to economic shocks and to rising borrowing costs. A newer economic factor is corporate tax: the rate applied to the Group rose from 9% to 15% in 2025-26 under the Pillar Two rules adopted by the UAE…
[End of preview] The remaining sections are included in the full solution, which is available on order. They cover the rest of the PESTLE analysis (social, technological, legal and environmental factors), the assessment of the income statement, balance sheet and cash flow statement including financing activities, the profitable-profile analysis (fleet planning and financing, Porter’s Five Forces, the DXB hub relationship, network and scheduling, cabin products and cargo, partnerships, pricing and revenue management), future growth and profit prospects, and the conclusion and recommendations.
References
Belobaba, P., Odoni, A. and Barnhart, C. (eds) (2015) The global airline industry. 2nd edn. Chichester: Wiley.
Doganis, R. (2019) Flying off course: airline economics and marketing. 5th edn. Abingdon: Routledge.
Emirates Group (2026) The Emirates Group annual report 2025-26. Dubai: The Emirates Group. Available at: https://c.ekstatic.net/ecl/documents/annual-report/2025-2026.pdf (Accessed: 10 November 2026).
O’Connell, J.F. (2011) ‘The rise of the Arabian Gulf carriers: an insight into the business model of Emirates Airline’, Journal of Air Transport Management, 17(6), pp. 339–346. Available at: https://doi.org/10.1016/j.jairtraman.2011.02.003.
Vespermann, J., Wald, A. and Gleich, R. (2008) ‘Aviation growth in the Middle East – impacts on incumbent players and potential strategic reactions’, Journal of Transport Geography, 16(6), pp. 388–394. Available at: https://doi.org/10.1016/j.jtrangeo.2008.04.009.
