Emirates has posted its second annual loss since its inception more than three decades ago but has vowed to bounce back “stronger than before”.
The Dubai airline reported a loss of Dh20.3 billion ($5.5bn) for the fiscal year ending March 31, compared with a profit of Dh1.1bn in the previous year, it said on Tuesday.
The only other time it posted a loss was in its 1987-1988 fiscal year, two years after it was founded in 1985.
Revenue fell by 66 per cent to Dh30.9bn due to the temporary suspension of passenger flights at its hub in March last year after the onset of the Covid-19 pandemic that sparked global travel restrictions.
Dnata, the ground-handling unit within the Emirates group, reported a loss of Dh1.8bn for the first time versus a Dh618 million profit a year ago.
“Economies and companies that entered pandemic times in a strong position will be better placed to bounce back,” said chairman and chief executive Sheikh Ahmed bin Saeed.
“Until 2020 to 2021, Emirates and dnata have had a track record of growth and profitability, based on solid business models, steady investments in capability and infrastructure, a strong drive for innovation and a deep talent pool led by a stable leadership team,” he said.
“These fundamental ingredients of our success remain unchanged. Together with Dubai’s undiminished ambitions to grow economic activity and build a city for the future, I am confident that Emirates and dnata will recover and be stronger than before.”
The Covid-19 pandemic is the worst crisis in the history of the global aviation industry.
The outbreak brought air travel to a near-standstill last year, forcing most airlines to cut costs and jobs, ground their fleets and seek government assistance to stay afloat. The International Air Travel Association expects a net industry loss of $126.4bn for last year after demand fell by 65.9 per cent from 2019 figures.
Major operators that reported annual losses for last year include Ryanair, American Airlines and Cathay Pacific.
State-owned Emirates received a capital injection of $3.1bn from the Dubai government while dnata availed of $218m in relief during the fiscal year.
Last year, the US government provided about $80bn in grants, loans and relief to help American airlines pull through the pandemic.
Emirates specialises in long-haul travel, a segment hit particularly hard by the pandemic and one that is expected by industry analysts to recover slower than the short-haul segment.
The operator grounded most of its fleet of 113 Airbus A380 superjumbos and has gradually restored its passenger network through its 146 wide-body Boeing 777s.
Its order book for 200 aircraft remains “unchanged at this time”, Emirates said yesterday. This includes five A380s, 50 wide-body A350-900s, 115 Boeing 777-8x or 777-9x variants and 30 Boeing Dreamliner 787-9s.
Revenue fell as passenger traffic dropped by 88 per cent from the previous year to 6.6 million travellers.
As an international airline with no domestic network, passenger capacity fell by 83 per cent while the passenger load factor dropped to 44.3 per cent, compared with 78.5 per cent last year.
Emirates had resumed flights to 120 destinations on its network by March this year.
The airline recorded a 48 per cent increase in passenger yield to 38.9 fils per revenue passenger kilometre.
This was largely due to a “favourable route mix, fares and continued healthy demand for premium seats”, it said. It also received three new A380s during the fiscal year and phased out 14 older aircraft, leaving its fleet at 259 jets at the end of March.
It closed the financial year with Dh15.1bn in cash after a one-time pay-out of Dh8.5bn for customer refunds.
Expenses fell by 43.7 per cent from a year ago to Dh51.2bn, with staff costs declining as the airline’s employee headcount fell by 32 per cent by the end of the year.
Air freight was a bright spot during the year, with Emirates SkyCargo’s revenue growing by 52.6 per cent from a year ago to Dh17.1bn due to the coronavirus-induced demand for transport medical supplies.
Cargo volumes in tonnes fell by 21.6 per cent to 1.9 million tonnes because of a reduction in available freight capacity.
However, freight yields increased by 88 per cent due to strong demand and reduced capacity.
The Emirates group recorded an annual loss of Dh22.1bn, its first in more than three decades, while revenue was down 66 per cent from the previous year to Dh35.6bn.
“No one knows when the pandemic will be over but we know recovery will be patchy,” said Sheikh Ahmed.
There were redundancies across all parts of the business, with workforce strength falling by 31 per cent to 75,145 employees.
The group took measures to reduce costs, resulting in about Dh7.7bn in savings during the year as financial obligations were restructured, contracts renegotiated, processes examined and operations consolidated.
“In the year ahead, we will continue to adopt an agile approach in responding to the dynamic marketplace,” said Sheikh Ahmed. “We aim to recover to our full operating capacity as quickly as possible.”