Emirates reports its first ever loss in 33 years. It announced an AED 22.1 billion ($6 billion) Group loss for its financial year 2020-2021 on June 15. The airline branch contributed to this loss with AED 20.3 billion. Emirates is giving no guidance on its current financial year, but aims “to recover to our full capacity as quickly as possible.”
With its financial year running from March to March, Emirates suffered all the pain from the pandemic right from the start. On March 24, 2020, it grounded its entire fleet of 270 aircraft. It first resumed cargo-only services with its Boeing 777Fs and nineteen converted -300ERs before adding limited passenger services from June. Only a dozen of its 117 Airbus A380s were brought back into service, but to this day most double-deckers remain in storage at Dubai World Central and Dubai International Airport.
It is reflected in the numbers. With just a fraction of its long-haul network available, passengers carried were down 88.3 percent to 6.6 million. The overall capacity was down by 57.7 percent and available seat kilometers (ASK) by 82.6 percent. Despite refocusing on cargo, tons carried were still 21.6 percent down on the previous year to 1.873 million as belly cargo capacity was lower. Most SkyCargo services were operated by the 777s but Emirates also converted some A380s for the transportation of medical supplies, with goods sometimes placed in the cabin. All cargo services were operated from DXB instead of DWC, which has dedicated cargo facilities.
Passenger revenues were down 85.4 percent
Looking at the financials, Emirates Airline’s net loss of AED 20.279 billion compares to an AED 1.056 billion profit in FY2019-20. The profit margin was -65.6 percent. The operating loss was AED 15.021 billion versus an AED 6.408 billion profit the previous year.
Total revenues were AED 30.927 billion, down from AED 91.972 billion. Passenger revenues were AED 11.012 billion (-85.4 billion), cargo revenues AED 17.106 billion (+52.6 billion). The airline reimbursed AED 8.5 billion in ticket costs to customers.
Cash assets were down by 25.4 percent to AED 15.108 billion. Without the reimbursements, cash flow from operating activities would have been AED 4.0 billion positive. Equity stood at AED 20.1 billion, total liabilities at AED 131.7 billion. Net debt stood at AED 107.6 billion.
Expenses included depreciation on three newly delivered A380s and six in the previous financial year, as well as a reduced charge following the retirement of fourteen aircraft. An impairment of AED 710 million was made, of which AED 500 million on four A380s that were retired as they are not expected to return to service before the end of their useful life or end or lease term in FY21-22.
Its ground handling, catering, and travel business, dnata, also suffered from the pandemic as services at airports across the world were reduced. Aircraft turns in the UAE were down by 59 percent, elsewhere by on average 57 percent. The number of meals produced was down by 82 percent to 16.9 million. Dnata reported a net loss of AED 1.821 billion compared to a 618 million profit the previous year. Revenues were down by 62.5 percent to AED 5.541 billion.
Emirates Group undertook AED 7.7 billion in cost reductions and preserved cash where possible, while at the same time investing AED 4.7 billion in new aircraft and facilities. It slashed its workforce by 31 percent to 75.145 employees, the biggest reduction in history. The UAE government supported Emirates with an AED 11.3 billion equity injection. It hasn’t said on any further injections that Sir Tim Clark discusses in April.
Despite its first loss in 33 years, chairman Sheikh Ahmed bin Saeed Al Maktoum said that Emirates remains committed to its order book of 200 aircraft, but added: “at this time.” The annual report mentions a backlog of five Airbus A380s (one has been delivered since), fifty A350-900s, thirty Boeing 787-9s, and 115 777-8s and -9s plus 61 options. The 777X order has been under review since late 2019, but Emirates hasn’t decided yet if it wants to swap more 777X for 787-9s.
It is also unsure if it will ever get the 777-8, which Boeing put on hold in 2019. President and CEO Sir Tim Clark has said on numerous occasions that he has no visibility on the 777X program whatsoever. Emirates hopes to receive the first 777-9s in late 2023, but this could easily slip into 2024 as well.