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Emirates raring to bounce back after posting super-rare loss

Issac John /Dubai
issacjohn@khaleejtimes.com Filed on November 12, 2020
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Emirates, dnata able to rapidly pivot to serve cargo demand and other pockets of opportunity.

For the first time in over 30 years, the Emirates Group reported on Thursday a loss of Dh14.1 billion in its April-to-September first-half of fiscal 2020-21, compared to Dh1.2 billion profit it made in the same period a year earlier.

While the group’s revenue plummeted 74 per cent to Dh13.7 billion, the flagship Emirates airline recorded a decline in revenue of 75 per cent to Dh11.7 billion, and loss of Dh12.6 billion after a half-year profit of Dh862 million for the same period last year, the group said in a statement.

“The group’s cash position on 30 September 2020 stood at Dh20.7 billion, compared to Dh25.6 billion as at 31 March 2020,” it said.

“This dramatic revenue decline was due to the Covid-19 pandemic, which brought global air passenger travel to a halt for many weeks as countries closed their borders and imposed travel restrictions. As part of pandemic containment measures, Emirates and dnata’s hub in Dubai also suspended scheduled passenger flights for eight weeks during April and May,” the group said.

Sheikh Ahmed bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority, Chairman of Emirates airline and Chief Executive of the Emirates Group, said it was for the first time in over 30 years the group recorded a half-year loss “in this unprecedented situation for the aviation and travel industry”.

“As passenger traffic disappeared, Emirates and dnata have been able to rapidly pivot to serve cargo demand and other pockets of opportunity. This has helped us recover our revenues from zero to 26 per cent of our position same time last year,” said Sheikh Ahmed.

“The Emirates Group’s resilience in the face of current headwinds is testimony to the strength of our business model, and our years of continued investment in skills, technology and infrastructure which are now paying off in terms of cost and operational efficiency.”

Sheikh Ahmed said Emirates and dnata have also built strong brands and agile digital capabilities which continue to serve the group well, and enabled it to respond adeptly to the accelerated shift of customer and business activities online over the past six months.

“No one can predict the future, but we expect a steep recovery in travel demand once a Covid-19 vaccine is available, and we are readying ourselves to serve that rebound. In the meantime, Emirates and dnata remain responsive in deploying resources to serve our customers and meet demand,” said Sheikh Ahmed.

In the first half of 2020-21, Emirates’ shareholders injected $2 billion by way of an equity investment. The Emirates Group’s employee base, compared to March 31, 2020, is substantially reduced by 24 per cent to an overall count of 81,334 as at September 30. This is in line with the company’s expected capacity and business activities in the foreseeable future.

During the first six months of 2020-21, Emirates retired three older aircraft from its fleet as part of its long-standing strategy to improve overall efficiency, minimise its emissions footprint, and provide high quality customer experiences.

Emirates gradually restarted scheduled passenger operations on May 21. By September 30, the airline was operating passenger and cargo services to 104 cities.

The airline carried 1.5 million passengers between April 1 and September 30, down 95 per cent from the same period last year. The volume of cargo uplifted at 0.8 million tonnes has decreased by 35 per cent while yield has more than doubled by 106 per cent.

The airline also took its customer commitment to the next level, by expediting refunds, offering rebooking flexibility, setting up a Covid-19 travel information hub on its website to offer the latest updates on ever-changing travel requirements, and by launching the industry’s first Covid-19 medical cover for all passengers at no additional cost.

Dnata’s revenue, including other operating income, was Dh2.4 billion, a 68 per cent decline compared to Dh7.4 billion last year. Overall loss for dnata is Dh1.5 billion, compared to last year’s profit of Dh311 million. This figure includes impairment charges of Dh689 million across dnata’s international business divisions, mainly pertaining to goodwill, the group said.

— issacjohn@khaleejtimes.com

author

Issac John

Editorial Director of Khaleej Times, is a well-connected Indian journalist and an economic and financial commentator. He has been in the UAE's mainstream journalism for 35 years, including 23 years with Khaleej Times. A post-graduate in English and graduate in economics, he has won over two dozen awards. Acclaimed for his authentic and insightful analysis of global and regional businesses and economic trends, he is respected for his astute understanding of the local business scene.





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