The Emirates Group has announced its half-year results for its 2020-21 financial year, turning in a loss for the first time in 30 years, and for the second time ever since it was first founded in 1985.
Given the ongoing pandemic, it was more or less expected that Emirates Group, owner of one of the largest and most well-known airlines in the world, would turn in a loss for their first-half (H1) results of 2020-2021.
Given the lockdowns that were put in place across the Middle East earlier this year, Emirates Group revenue dropped to AED 13.7 billion ($3.7 billion) for the first six months of 2020-21, down 74% from AED 53.3 billion ($14.5 billion) during the same period last year.
As part of pandemic containment measures, Emirates and dnata’s hub in Dubai suspended scheduled passenger flights for 8 weeks during April and May. Emirates had temporarily suspended passenger flights on March 25th as per government guidance, and began resuming passenger operations on May 21st. By September 30th, the airline was operating passenger and cargo services to 104 cities.
Emirates Group even announced major layoffs earlier this year, cutting down its staff by 24% between March 31st 2020 and September 30th 2020, down to an overall count of 81,334. This was in line with the company’s expected capacity and business activities in the foreseeable future and general industry outlook.
Still, this did not prevent the Group from incurring a 2020-21 half-year net loss of AED 14.1 billion ($3.8 billion), joining fellow UAE airline Etihad in loss-making territory.
As for its cash position, as of 30th September, it stood at AED 20.7 billion ($5.6 billion), compared to AED 25.6 billion ($7.0 billion) as of March 30th 2020, denoting a strong fiscal position that should help the company brace itself financially for the challenging months ahead.
Emirates also noted that overall capacity during the first six months of the year declined by 67% to 9.8 billion Available Tonne Kilometres (ATKM) due to a substantially reduced flight program over the past months. Capacity measured in Available Seat Kilometres (ASKM), shrunk by 91%, whilst passenger traffic carried measured in Revenue Passenger Kilometres (RPKM) 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 April 1st and September 30th 2020, down 95% from the same period last year. The volume of cargo uplifted at 0.8 million tonnes has decreased 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 has managed to weather this storm better than most"
Looking at these results, Saj Ahmad, Chief Analyst at StrategicAero Research, notices a silver lining for the Dubai-based airline:
"For only the second time it its history, Emirates has reported this loss against a backdrop of one of the worst pandemics that has battered the global aviation industry in ways no one thought possible.
"With traffic declining sharply, it’s no surprise that the airline recorded a $3.4bn loss- traffic was down 74% and while the wider group cash position remains robust at over $5.6bn despite the vast refunds it has offered its customers, on balance, Emirates has managed to weather this storm better than most.
"When you compare Emirates against other global legacy carriers like British Airways, American Airlines, Delta and others, Emirates’ performance has been far better and robust despite the environment around it.
"Emirates was quick to reconfigure some of its 777-300ERs for cargo use to help stem the loss of income, but this was never going to be a substitute for long term revenue generation given the totally unforeseen and unprecedented market realities that has absolutely obliterated global air travel demand in the way that it has."
A vaccine is closer to reality, but what comes next?"Sadly, Emirates has also had to slash its workforce by 24% to stem the cash burn across its business – but with the news this week than a 90% effective COVID vaccine is on the brink of approval for use, this financial year as well as 2021 will be aberrations for Emirates," Ahmad continued.
"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."
Even with the positive vaccine news circulating, the travel and tourism sector won't be out of the woods any time soon, and Emirates has quite the year ahead of it.
According to a recent report by global consulting firm Oliver Wyman and The World Travel and Tourism Council (WTTC), a globally coordinated approach is needed for the travel and tourism sector to recover from the COVID-19 pandemic. This includes a mutual consensus on matters such as preventative measures, quarantine protocols, and other travel-related health and safety protocols, which falls in line with what Dubai Airports CEO Paul Griffiths said last month.