How UAE airlines are trying to stay afloat amid coronavirus pandemic

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Dubai - Carriers are engaged with different stakeholders and authorities for favourable payment terms and discounts.

By Waheed Abbas

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Published: Tue 19 May 2020, 2:35 PM

Last updated: Tue 19 May 2020, 4:56 PM

UAE airlines are using all possible means such as loan deferment, payment holidays, staff layoffs and unpaid leave for staff to stay afloat and save available liquidity as they look towards a gradual return to service in the aftermath of Covid-19 pandemic.
The local carriers are engaged with different stakeholders including banks, lessors, suppliers and airport authorities for favourable payment terms and discounts to lessen the impact of pandemic and to help them take off smoothly once the pandemic recedes in coming months.
"Like all airlines, Emirates' ability to operate has been temporarily impaired by the ongoing Covid-19 pandemic which has resulted in global restrictions on flights and travel. We are working closely with our suppliers, partners, and lessors to develop pragmatic solutions to our current operating constraints, and against the projected industry outlook in the coming months," an Emirates spokesperson said in a statement to Khaleej Times.
Emirates this week said all departments have been asked to review costs.
In order to support local businesses, the UAE Central Bank announced Dh50 billion facility at zero interest as part of its Dh256 billion stimulus package for local banks to extend support to companies and individuals with loan deferment. The facility is open to private businesses in the aviation sector as well.
The UAE airlines have 633 aircraft on order worth an estimated $135 billion. The major expenses for the UAE carriers are fuel, labour, airplane fees (if leased/financed), airport fees (parking, handling, catering, energy), logistics, legal/counsel, insurance and taxes.
Also read: Etihad lays off employees across several areas
Abu Dhabi-based Etihad Airways said the national carrier is "working closely with major industry partners on its global supply chain to arrange more favourable payment terms during the current period."
Budget carrier
The UAE's budget carriers flydubai and Air Arabia are also looking at short-term and long-term liquidity management issues.
Sharjah-based Air Arabia, which is planning for a gradual return to service, said it has taken measures to minimise liquidity risks, through a combination of salary cuts and through a mechanism for staff based on any unpaid leave, deferred non-essential costs and capital expenditure, and have received waivers/discounts on some of existing airport charges along with other obligations," Air Arabia said in its quarterly financial report.
"Air Arabia has requested deferral of principal and interest on all existing aircraft loans spread across various banks. Further, UAE Central Bank announced a Targeted Economic Support Scheme in March and under the directives, any organization that is directly affected by Covid-19 situation and is non-government entity qualifies for deferment and interest waiver.
"The Group has evaluated its liquidity and funding position and, accordingly, approached their local banks to cover under this scheme, and provide the Group with maximum deferment and interest holiday," the carrier said in its quarterly financial report.
The company said it has a sound liquidity position with Dh3.072 billion available funds.
"We have implemented our contingency planning and the team at flydubai is carefully exploring different options in these unprecedented times. We are working closely with our key stakeholders including our aircraft lessors, financial institutions, airport authorities and suppliers as part of our short-term and long-term liquidity management," a flydubai spokesperson said.
(Source: Emirates, flydubai, Etihad, Air Arabia, StrategicAero Research, KT Research)

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