The Emirates Group has announced through a statement that it has posted a massive COVID-19 induced US$3.8 billion half year loss, the first in over 30 years, for its 2020-21 financial year, blaming the “literal standstill” in air transport triggered by the coronavirus pandemic.
The statement said that group revenue was US$ 3.7 billion for the first six months of 2020-21, down 74% from US$ 14.5 billion during the same period last year, with this dramatic revenue decline 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.
Also as part of pandemic containment measures, Emirates and dnata’s hub in Dubai also suspended scheduled passenger flights for 8 weeks during April and May.
While the Group was reporting a 2020-21 half-year net loss of US$ 3.8 billion, its cash position on 30 September 2020 was US$ 5.6 billion, compared to US$ 7.0 billion as at 31 March 2020.
His Highness (HH) Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group said, “We began our current financial year amid a global lockdown when air passenger traffic was at a literal standstill”, adding, “In this unprecedented situation for the aviation and travel industry, the Emirates Group recorded a half-year loss for the first time in over 30 years.”
He added, “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% of our position same time last year.”
“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.”
“Emirates and dnata have also built strong brands and agile digital capabilities which continue to serve us well, and enabled us to respond adeptly to the accelerated shift of customer and business activities online over the past 6 months.”
Sheikh Ahmed added, “We would like to thank our customers for their continued support, and express our appreciation for the combined stakeholder efforts that have made it possible for Dubai to resume aviation and other economic activity so quickly and safely.”
“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, with in the meantime, Emirates and dnata remain responsive in deploying resources to serve our customers and meet demand.”
“We have been able to tap on our own strong cash reserves, and through our shareholder and the broader financial community, and we continue to ensure we have access to sufficient funding to sustain the business and see us through this challenging period. In the first half of 2020-21, with our shareholder injecting US$ 2 billion into Emirates by way of an equity investment and they will support us on our recovery path.”
The Emirates Group’s employee base, compared to 31 March 2020, is substantially reduced by 24% to an overall count of 81,334 as at 30 September 2020, with this in line with the company’s expected capacity and business activities in the foreseeable future and general industry outlook, with Emirates and dnata continuing to look at every means to protect its skilled workforce, including participating in job saver programmes where these exist.
Emirates gradually restarted scheduled passenger operations on 21 May, with by 30 September, the airline was operating passenger and cargo services to 104 cities, although overall capacity during the first six months of the year declined by 67%, due to a substantially reduced flight programme over the past months, including the suspension of passenger flights at Dubai international airport for 8 weeks.
Capacity shrunk by 91%, whilst passenger traffic carried was down by 96% with average passenger seat factor falling to 38.6%, compared with last year’s pre-pandemic figure of 81.1%.
Emirates carried 1.5 million passengers between 1 April and 30 September 2020, down 95% from the same period last year, with the volume of cargo uplifted at 0.8 million tonnes decreasing by 35%, while yield has more than doubled by 106% reflecting the extraordinary market situation for air freight during the global COVID-19 crisis, where drastically reduced passenger flights led to limited available capacity while airfreight demand rose strongly.
Emirates was able to uplift 65% of its cargo volumes compared to the same period last year, which shows its cargo division’s outstanding agility in adapting its operations to provide air freight services in this new environment, with in a very short time, Emirates Skycargo completed the partial retrofit of 10 Boeing 777-300ER passenger aircraft to transport freight on the main deck, introduced new operation protocols to enable the safe uplift of cargo in passenger cabins, rapidly restarted and scaled up its global cargo network, and put in place comprehensive bio-safety protocols for employees.
In the first half of the 2020-21 financial year, Emirates loss was US$ 3.4 billion, compared to last year’s profit of US$ 235 million, with Emirates revenue, including other operating income of US$ 3.2 billion down 75% compared with the US$ 12.9 billion recorded during the same period last year, with this result due to severe flight and travel restrictions around the world relating to the COVID-19 pandemic.
Emirates operating costs reduced by 52% against the overall capacity decrease of 67%, with fuel costs 83% lower compared to the same period last year, due to a decrease in oil prices, down 49% compared to same period last year, as well as a 76% lower fuel uplift from substantially reduced flight operations during the six months period up to end of September.
Fuel, which was the always the largest component of the airline’s cost in past reporting cycles, only accounted for 11% of operating costs compared with 32% in the first six months of last year.
Despite the significant drop in operations during the six months, Emirates’ EBITDA stood positive at US$ 79 million compared to US$ 3.6 billion for the same period last year.
The statement says dnata’s businesses in ground handling, catering and travel services were heavily impacted by the COVID-19 pandemic as customer airlines cut their flight schedules and service requirements or suspended operations entirely and dynamic border restrictions around the world curbed travel demand and bookings, adding robust airfreight traffic across markets was a bright spot for dnata’s airport operations which responded nimbly to meet customer demand.
dnata’s revenue, including other operating income, was US$644 million, a 68% decline compared to US$ 2.0 billion last year, with an overall loss for dnata of US$396 million, compared to last year’s profit of US$ 85 million, with this figure including impairment charges of AED 689 million across dnata’s international business divisions, mainly related to goodwill.
dnata’s airport operations remain the largest contributor to revenue with US$ 454 million, a 54% decline as compared to the same period last year, with across its operations, the number of aircraft handled by dnata declined sharply by 71% to 102,917 and it handled 1.3 million tonnes of cargo, down only 12%.
dnata’s travel division contributed US$ 26 million compared to US$488 million for the same period last year, down 95%, with the division reporting negative underlying total transactional value sales of US$ 67 million for the first time, after a positive contribution of US$ 1.6 billion for the same period last year, reflecting the significant refund volume and pay-out in cancelled customer bookings mainly during the beginning of the pandemic.
dnata’s flight catering operation contributed US$ 116m, down 76%, with the number of meals uplifted declining by 84% to 8.3 million meals for the first half of the financial year after last year’s 51.9m record performance.
A report by John Alwyn-Jones
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