From New York to Nairobi, Paris to Perth and Beijing to Buenos Aires, Emirates is internationally acclaimed as one of the world’s elite airlines – and one of its most powerful brands. James Dartnell sits down with the company’s Senior Vice President of Group Finance, Michael Doersam, to discuss the firm’s remarkable financial performance and ambitious growth objectives.
Once you’ve caught the scent of kerosene, nothing else will satisfy.” Michael Doersam recites the aviation adage with a wry smile, revealing a passion for the industry – which began in line with his tenure at German carrier Lufthansa in 1988 – that has seen him make a marked rise to becoming one of the most established and influential finance chiefs in the Middle East, at Emirates airline.
Serving 144 cities in 81 countries from its Dubai hub, Emirates is currently experiencing something of a purple patch. Founded in 1985, the Group has seen the size of its business triple in the last nine years, and things don’t look like slowing down. Synonymous with excellent customer service, contemporary products – the company has just added routes to Bali, Orlando, Multan and Bologna to its roster – and a superlative travel experience, the name ‘Emirates’ is firmly established in the four corners of the globe. Emirates Group recently reported a formidable 34.6 percent operating profit increase for the financial year 2014-15, with an imposing ability to grow its customer base, and continually satisfy those who are already on side.
Joining the company in 2006, Doersam’s initial role at the company was Vice President of Outstation Finance and Risk Management, and the international experience associated with the job has laid the foundations for a successful career in the UAE. “I’ve realised I love different cultures,” he says. “I love different thinking, work processes and ways of addressing problems. I’d lived in Bangkok and Toronto when I was working for Lufthansa, but Dubai as a place to live and Emirates as a place to work are both truly international.”
Off the back of Emirates’ huge development, the company has some exciting expansion plans in store for 2016. As well as the new flight destinations, the firm is adding aircraft capacity to a range of its destinations, and where applicable, is phasing out A330 aircraft with Boeing 777 and A380 models, with 28 new aircraft being introduced.
Despite Emirates’ immense financial progress, the airline business remains a low-margin, cutthroat industry. For his part, Doersam is tasked with keeping a watchful eye on a number of performance metrics that make the difference between success and failure. “On the commercial side, the main KPIs that I pay attention to are revenue per passenger and seat load factor – how well the aircraft and passenger are filled with cargo,” he says. “On the finance side, it’s the cash we generate from our operation which can be used for our investments and debt services. In finance I think it’s a mixture between some productivity figures and also the qualitative aspect of the work we perform for the Group.”
He says that the high pressure associated with the aviation industry gives it added intrigue. “From a finance perspective, working for an airline is challenging and interesting,” he says. “If a seat is empty today, it cannot be filled tomorrow. It’s not a product you can put into a store, or a business where you can reduce production. Working in a low-margin industry makes you look at topics differently, and forces you to think of creative solutions to a range of issues.”
As one of the most dynamic pillars of any business, the data gleaned by the finance department forms the essential groundwork on which all the majority of business decisions are based. Doersam says that a balance of risk and reward must be reached to achieve excellent results. “Finance is always there to support the business and be its partner,” he says. “These days, the function has access to so much data, but it’s a question of converting it and making that relevant to the business owners. As finance executives, we have to be very open to ideas and opportunities, as well as business risks and mitigation, and only then can the CFO role become meaningful; it’s not merely a question of presenting the balance sheet.” Doersam feels fully supported by the C-suite – including company Chairman and CEO His Highness Sheikh Ahmed bin Saeed Al Maktoum – in undertaking the right ventures for the company. “The senior management works in close collaboration with finance,” he says. “How we define our role is key as well; we need to ensure we think practically from a commercial and overall business perspective.”
The shift to digitalisation – one that will impact businesses across the board – is a large part of what Doersam is referring to, and he is mindful of Emirates’ need to capitalise on the trend. The ability to exploit any possible advantage is key. “The main question for us is ‘what will be its impact on finance?’” he says. “The massive quantities of data that are available need to be used in a meaningful way, and for this to happen, a strong collaboration between technology and finance is needed. We need to find the right information so that the business can benefit.”
Attributing Emirates’ profit hike to a range of factors, Doersam is keen to stress that despite the company’s success, it has had to face various unpredictable obstacles in what has been a turbulent period. “Financially, it’s been the most volatile year in our history,” he says. “A range of factors are behind that. The drop in the fuel price was hugely advantageous for us, while the strengthening of the US dollar impacted our revenue. Other factors like the Ebola outbreak, as well as political instability in the Middle East – which of course is crucial – have been obstacles that the company has had to face, but have been a testing and stimulating experience.”
Throughout these tribulations, Doersam’s tremendous faith in Emirates’ quality of service and agility in coping with change have endured. “We’re highly flexible at dealing with demand shifts,” he says. “The products we offer are extremely customer-focused, and both these things have played a massive part in keeping costs under control and assisting our revenue drive.”
Doersam firmly believes that comprehensive upgrades in business processes and technology in the finance division over the last nine years have made a huge contribution to the company’s success. While modern initiatives like on-board Wi-Fi play their part in keeping customers happy, the sharpening of internal affairs has been hugely beneficial. “We’ve transformed,” he says. “On the one hand, the automation of systems and processes has been hugely advantageous from an accounting perspective. At the same time, it’s opened up new opportunities on the analytics side. Things move much faster compared to nine years ago. Finance is a vital partner to the business, and is always thinking of new ways of fuelling Emirates.”