Dubai’s Emirates Group reports first half-year loss in over 30 years

Dubai’s Emirates Group reported a 2020-21 half-year net loss of Dhs14.1bn, down from a net profit of Dhs1.2bn recorded during the same period last year.

This marks the group’s first half-year loss in over 30 years.

The group’s revenue, however, totaled Dhs13.7bn for the first six months of 2020-21, down 74 per cent from Dhs53.3bn reported during a year-earlier period.

The revenue decline was due to the repercussions of 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.

Emirates and dnata’s hub in Dubai also suspended scheduled passenger flights for eight weeks during April and May this year, as part of the pandemic containment measures.

Read: UAE suspends all inbound and outbound passenger flights for two weeks

The group’s cash position on September 30, 2020 stood at Dhs20.7bn, compared to Dhs25.6bn as at March 31, 2020.

The Emirates Group announces its half-year results for 2020-21 financial year, demonstrating agility and resilience in the face of current headwinds. https://t.co/tnH6bM3x0Q pic.twitter.com/tO1BZdrAOE

— Emirates Airline (@emirates) November 12, 2020

“We began our current financial year amid a global lockdown when air passenger traffic was at a literal standstill,” said Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airline and Group. “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.”

“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.

“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,” added Sheikh Ahmed.

“We have been able to tap on our own strong cash reserves, and through our shareholder and the broader financial community, 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, our shareholder injected $2bn 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 March 31, 2020, is substantially reduced by 24 per cent to an overall count of 81,334 as at September 30, 2020.

“With traffic declining sharply by 74 per cent, the financial hit was always going to be rather brutal,” opined Saj Ahmad, chief analyst at StrategicAero Research. “We’ve seen the same dynamics hit major US airlines even harder, so on balance, given the circumstances, Emirates has managed to cope better despite the economic backdrop being horrific and volatile.”

“As this vaccine is distributed globally, there will be a progressive return to demand for air travel – and with it, the fortunes of Emirates ability to induct new generation 787-9s, 777X and A350s to help augment its restructuring in the face of a new competitive landscape. While we won’t see an immediate return to heady profitability as we have witnessed in years gone by, Emirates’ moves to downsize, become more agile and receptive to market demand places it in good stead to move away from the bigger A380 fleet as it repositions itself for a different future,” he added.

Emirates Airline
In the first half of the 2020-21 financial year, Emirates loss equaled Dhs12.6bn, compared to last year’s profit of Dhs862m.

Emirates revenue, including other operating income, of Dhs11.7bn was also down 75 per cent compared with the Dhs47.3bn recorded during the same period last year. This result was due to severe flight and travel restrictions around the world relating to the Covid-19 pandemic.

Meanwhile, Emirates operating costs reduced by 52 per cent against the overall capacity decrease of 67 per cent.

Fuel costs were 83 per cent lower compared to the same period last year, due to a decline in oil prices. However, despite the significant drop in operations during the six months, Emirates’ EBITDA stood positive at Dhs290m compared to Dhs13.2bn for the same period last year.

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

Emirates temporarily suspended passenger flights on March 25 and worked closely with governments and embassies to operate repatriation services until Dubai International airport re-opened for transit and scheduled passenger flights.

Read more: Update: Dubai’s Emirates says to stop ‘most’ passenger flights from March 25

In September, Emirates confirmed to have returned over Dhs5bn in Covid-19 related travel refunds. It also launched the world’s first Covid-19 medical cover for passengers at no additional costs.

Read: Dubai’s Emirates processes over 1.4 million refund requests; returns $1.4bn to customers

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

Emirates carried 1.5 million passengers between April 1 and September 30, 2020, down 95 per cent from the same period last year.

Dnata
Dnata’s revenue, including other operating income, stood at Dhs2.4bn, marking a 68 per cent decline compared to Dhs7.4bn last year.

Overall loss for dnata is Dhs1.5bn, compared to last year’s profit of Dhs311m, including impairment charges of Dhs689m across dnata’s international business divisions, mainly pertaining to goodwill.

Dnata’s airport operations remains the largest contributor to revenue with Dhs1.7bn, a 54 per cent decline as compared to the same period last year.

The number of aircraft handled by dnata declined sharply by 71 per cent to 102,917, and it handled 1.3 million tonnes of cargo.

Dnata’s travel division contributed Dhs95m to revenue after Dhs1.8bn for the same period last year, down 95 per cent.

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.

Across its business divisions, dnata implemented enhanced health and safety measures to safeguard employees and communities, and partnered with healthcare providers to offer airline passengers pre-travel Covid-19 PCR tests as part of its home check-in services.

Read more: Dnata’s DUBZ now offers Covid-19 testing as part of its home check-in services in Dubai