Dubai's Emirates Group records Dh22b loss for 2020-21 - its first in more than 30 years

Dubai: The Emirates Group recorded a loss of Dh22.1 billion for 2020-21 – its first one in more than three decades as the COVID-19 wreaked havoc on the aviation industry.

"The COVID-19 pandemic continues to take a tremendous toll on human lives, communities, economies, and on the aviation and travel industry," said Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group. "In 2020-21, Emirates and dnata were hit hard by the drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions."

Emirates received a capital injection of Dh11.3 billion ($3.1 billion) from Dubai, while dnata tapped various industry support programmes and availed a total relief of nearly Dh800 million during 2020-21. "These helped us sustain operations and retain the vast majority of our talent pool," said Sheikh Ahmed. "Unfortunately, we still had to make the difficult decision to resize our workforce in line with reduced operational requirements."

Redundancies were implemented across all divisions - the Group’s total workforce reduced by 31 per cent to 75,145 employees.

Emirates carried 6.6 million passengers (down 88 per cent) in 2020-21, while seat capacity was down by 83 per cent. The airline operations reported a loss of Dh20.3 billion after last year’s Dh1.1 billion profit, and a negative profit margin of 65.6 per cent.

Heavy restructuring

In keeping with the times, Emirates made sure "financial obligations were restructured, contracts renegotiated, processes examined and operations consolidated," the airline said in a statement. "The various cost reduction initiatives returned an estimated saving of Dh7.7 billion during the year."

These fundamental ingredients of our success remain unchanged

- Sheikh Ahmed bin Saeed Al Maktoum

Sheikh Ahmed added: "No one knows when the pandemic will be over, but we know recovery will be patchy. Economies and companies that entered pandemic times in a strong position, will be better placed to bounce back.

"Until 2020-21, 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. 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."

Strategy for next liftoff

"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 to serve our customers, and to continue contributing to the rebuilding of economies and communities impacted by the pandemic."

No changes to orders

Emirates’ order book for 200 new aircraft will remain "unchanged at this time". The airline is "firmly committed" to its long-standing strategy of operating a "modern and efficient" fleet. The airline's passenger and cargo capacity declined by 58 per cent to 24.8 billion ATKMs (available tonne kilometres) at the end of 2020-21, due to the various flight and travel restrictions. This included a complete suspension of commercial passenger services for nearly eight weeks as directed by the UAE government from March 25, 2020.

In addition to the Dh14.5 billion financing that was raised for aircraft and general corporate purposes in 2020-21, Emirates has received committed offers to finance two aircraft deliveries due over the coming months. It continues to tap the "financial market for further liquidity to provide a cushion for the potential impact of COVID-19 on the business cashflows in the near term".