MIAMI – Emirates Airlines (EK) announced its half-year results for the financial year 2020-21 in a statement early Thursday. The UAE-based carrier made a loss of US$3.4bn after making a US$235m profit in the same period last year. Despite massive losses, the airline turned towards its cargo business as a source of revenue in absence of passenger service.
The COVID-19 pandemic has understandably taken a devastating toll on the airline industry, especially for carriers such as EK, which lean on their long-haul service. EK operates a young fleet of 266 aircraft, predominately comprised of ships from the Boeing 777 and Airbus A380 families.
As demand for airline travel rapidly disappeared, EK shifted their focus to still-lucrative cargo routes.
“As passenger traffic disappeared, Emirates and dnata have been able to rapidly pivot to serve cargo demand and other pockets of opportunity. This has helped us recover our revenues from zero to 26% of our position same time last year”, said EK CEO Sheikh Ahmed bin Saeed Al Maktoum.
Cutbacks and Cash Injections
In an effort to cut costs, the Emirates Group reduced the workforce to just over 75% of pre-pandemic numbers. This included jobs within EK and ground services subsidiary, Dnata. EK also retired three of it’s aircraft, including one Airbus A380-800. Prior to the events of 2020, the airline announced plans to move in the direction of a more efficient business model. However, the pandemic has sped-up this process.
Between March and September, EK burned through US$1.4bn in cash. However, EK CEO Sheikh Ahmed bin Saeed Al Maktoum credited the airline’s strong financial position and cash reserves prior to 2020 as a reason behind their survival. “The 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 said.
Although EK boasts a positive financial situation, the statement cites a US$2bn shareholder injection. This is referring to a US$2bn government bailout that was announced in late August.
Positivity in the Cargo Industry
Emirates carried 1.5 million passengers between March and September 2020, a 95% decrease from the same period last year. With travel demand in shambles, EK looked to the cargo side of the business to boost revenues.
As a result of the global pandemic, the demand for cargo volume has reached record highs. EK transported 800,000 tons of cargo between April 1 and 30 September 2020, only 65% of the same period last year. However, the lesser amount yielded over 100% more than last year–representing the record demand.
Using its large fleet of mainly long-haul aircraft, EK displayed flexibility during tough times. Emirates Skycargo, the airline’s cargo division, partially converted 10 777-200ER passenger aircraft to carry freight in the main cabin.
Despite the current situation, EK and its CEO Sheikh Ahmed bin Saeed Al Maktoum are choosing to remain hopeful that the demand for air travel will soon return. “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”, he said.
Featured Image: Emirates Airbus A380-800 PHOTO: Luca Flores/Airways