Emirates chief expects 'steep' travel demand recovery despite Covid-induced first half loss
Cargo demand helped revenues recover to 26 per cent from zero
Emirates, the world's largest long-haul carrier, swung to a loss in the first half of the year due to the impact of the Covid-19 pandemic on the travel industry, but expects a strong rebound in demand on the back of a vaccine.
The company reported a Dh12.6 billion ($3.4bn) loss for the first six months of 2020-21 compared with a half-year profit of Dh862m last year, the company said in a statement on Thursday. Revenue dropped 75 per cent to Dh11.7bn in the period.
For the first time in over 30 years, Emirates Group, which includes airport and travel services arm dnata, posted a loss of Dh14.1bn, compared with a profit of Dh1.2bn in the year-earlier period. Revenue fell 74 per cent to Dh13.7bn. Dnata reported a loss of Dh1.5bn compared with a Dh311m profit in the same period a year earlier, as revenue dropped 67 per cent to Dh2.4bn.
"We began our current financial year amid a global lockdown when air passenger traffic was at a literal standstill," Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates airline and group, said. "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."
Earlier this week Pfizer and BioNTech said a Covid-19 vaccine being developed by them was found to be more than 90 per cent effective in phase 3 trials — the final stage before commercial licensing.
The Covid-19 pandemic has claimed over 1.29 million lives globally as of Thursday, tipped the world economy into a recession and brought the travel industry to a grinding halt. The health crisis forced airlines to severely cut back their operations and ground aircraft, with many cash-strapped carriers furloughing workers or cutting jobs as part of cost curbing measures.
The plunge in air travel has put 4.8 million jobs in the aviation industry at risk and government action is needed globally to provide financial support to the industry and safely reopen borders, according to the International Air Transport Association and the International Transport Workers’ Federation.
Cathay Pacific, American Airlines, United Airlines, British Airways, Lufthansa and other carriers have cut thousands of jobs in recent months with many planning to reduce their workforce further.
Emirates Group has reduced its headcount by 24 per cent since the end of March 2020, to 81,334 as of the end of September, according to the statement.
"This is in line with the company’s expected capacity and business activities in the foreseeable future and general industry outlook," the company said. "Emirates and dnata continue to look at every means to protect its skilled workforce, including participating in job saver programmes where these exist."
Last month, Iata said it expects global airlines to burn through $77bn of cash in the second half of 2020 as the decline in revenue outpaces cost savings and various government wage subsidy programmes start to expire.
“As passenger traffic disappeared, Emirates and dnata have been able to rapidly pivot to serve cargo demand and other pockets of opportunity," Sheikh Ahmed said. "This has helped us recover our revenues from zero to 26 per cent of our position same time last year.
“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," he added.
Strong branding and agile digital capabilities have helped Emirates and dnata "respond adeptly to the accelerated shift of customer and business activities online over the past 6 months”, Sheikh Ahmed said.
Sheikh Ahmed said Emirates was able to use its strong cash reserves, and through the Dubai government and the broader financial community, ensure it has access to sufficient funding to sustain the business through the challenging period. The Dubai government, which injected $2bn into Emirates by way of an equity investment in March, "will support us on our recovery path”, he said.
Emirates carried 1.5 million passengers from the start of April to the end of September, 95 per cent fewer than the same period last year.
The volume of cargo uplifted at 0.8 million tonnes decreased 35 per cent, while yield has more than doubled.
Iata expects full-year traffic for 2020 to be 66 per cent lower than last year. Last month it said total industry revenues next year are expected to be 46 per cent lower than in 2019, at $838bn.
Updated: November 14, 2020 10:14 AM