Emirates posts annual loss amid pandemic but promises to come back 'stronger than before'
Emirates, the world's largest long-haul carrier, posted its second annual loss since its inception over three decades ago, as the Covid-19 pandemic ravaged the travel industry, but the airline vowed to return "stronger than before", its chairman and chief executive said.
The Dubai-based carrier reported a Dh20.3 billion ($5.5bn) loss for its fiscal year ending March 31, compared with an annual profit of Dh1.1bn in the previous period, it said on Tuesday. The only other time the carrier posted a loss was in its 1987-1988 fiscal year after its founding in 1985. Revenue dropped 66 per cent to Dh30.9bn due to the temporary suspension of passenger flights at its hub in March 2020 and ongoing global travel restrictions.
"Economies and companies that entered pandemic times in a strong position, will be better placed to bounce back," Emirates chairman Sheikh Ahmed bin Saeed Al Maktoum said.
"Until 2020-21, Emirates and dnata have had a track record of growth
and profitability, based on solid business models, steady investments in
capability and infrastructure, a strong drive for innovation, and a
deep talent pool led by a stable leadership team," he said. "These
fundamental ingredients of our success remain unchanged. "Together with
Dubai’s undiminished ambitions to grow economic activity and build a
city for the future, I am confident that Emirates and dnata will recover
and be stronger than before."
The Covid-19 pandemic is the worst crisis in the history of the global aviation industry. The virus outbreak brought air travel to a near-standstill in 2020, forcing airlines to ground most of their fleet, slash jobs, cut costs and seek government assistance to survive the crisis as they bled cash.
The International Air Travel Association (Iata) estimates a net industry loss of $126.4bn in 2020 as demand fell by 65.9 per cent compared to 2019. Major carriers that reported annual losses for 2020 include Ryanair, American Airlines and Cathay Pacific, among others.
State-owned Emirates received a capital injection of $3.1bn from its Dubai government shareholder, while dnata tapped various industry support programmes and availed relief of nearly $218 million during the fiscal year. Last year, the US government provided about $80bn in grants, loans and relief to help American carriers weather the pandemic.
Emirates specialises in long-haul travel, a segment hit particularly hard by the pandemic and one that is expected by industry analysts to recover slower than short-haul trips. The carrier grounded most of its fleet of 113 Airbus A380 superjumbos, while gradually restoring its passenger network with 146 widebody Boeing 777s.
Emirates’ order book for 200 aircraft remains "unchanged at this time", the carrier said on Tuesday. The order book includes five A380s, 50 widebody A350-900s, 115 Boeing 777-8x/9x and 30 Boeing Dreamliner 787-9s.
Emirates airline's revenue fell as passenger traffic dropped 88 per cent year-on-year and it carried 6.6 million travellers. As an international airline with no domestic network, passenger capacity fell by 83 per cent while passenger load factor dropped to 44.3 per cent compared with 78.5 per cent last year. Emirates restored 120 destinations to its network by March 2021.
It recorded a 48 per cent increase in passenger yield to 38.9 fils per revenue passenger kilometre, due largely to a "favourable route mix, fares and continued healthy demand for premium seats", it said.
The airline received three new A380s during the fiscal year and phased out 14 older aircraft, leaving its total fleet count at 259 at the end of March.
The airline closed the financial year with Dh15.1bn in cash, after a one-time payout of Dh8.5bn for customer refunds.
Total costs fell 43.7 per cent year-on-year to Dh51.2bn, including lower staff costs as the airline's employee head-count fell 32 per cent by year-end.
Air freight was a bright spot during the year, with Emirates SkyCargo's revenue increasing 52.6 per cent year-on-year to Dh17.1bn due to the pandemic-induced demand to transport medical supplies. Cargo volumes in tonnes decreased by 21.6 per cent to 1.9 million tonnes, due to the reduced available bellyhold capacity. However, freight yields increased 88 per cent due to strong demand and reduced capacity.
Emirates Group recorded an annual loss of Dh22.1bn, its first in more than three decades. Group revenue declined 66 per cent year-on-year to Dh35.6bn.
"No one knows when the pandemic will be over, but we know recovery will be patchy," Sheikh Ahmed said. The Emirates Group implemented redundancies across all parts of the business, reducing its total workforce by 31 per cent to 75,145 employees.
The group took measures to reduce its costs, resulting in estimated savings of Dh7.7bn during the year as financial obligations were restructured, contracts renegotiated, processes examined and operations consolidated.
Dnata, the ground-handling unit, reported a loss of Dh1.8bn for the first time versus a Dh618m profit a year ago. "In the year ahead, we will continue to adopt an agile approach in responding to the dynamic marketplace," Sheikh Ahmed said. "We aim to recover to our full operating capacity as quickly as possible."
