Emirates Gets Government Aid After Pandemic Leads to Huge Loss

Emirates Group was propped up by the Dubai government with a $3.1 billion cash infusion after a collapse in long-haul travel, the airline’s main business, led to its first loss in decades.

The deficit for the fiscal year ended March 31 came in at 22.1 billion dirhams ($6 billion), while revenue dropped 66% to 35.6 billion dirhams, the airline said. The state-owned company received a capital injection of 11.3 billion dirhams.

Emirates has been hit particularly hard by the pandemic, with widespread border curbs preventing travelers to make the inter-continental journeys in which the carrier specializes. The airline has grounded most of its fleet of Airbus SE A380 superjumbos, while its Boeing Co. 777s are struggling with lower passenger loads and are transporting mainly cargo for the time being.

Airlines and the hubs they serve are wrestling with an uncertain outlook as governments try to slowly reopen travel while flights remain restricted to countries such as India and the U.K., two of the most important markets for Emirates.

The pandemic has hammered the aviation industry around the globe; Air France KLM and Deutsche Lufthansa AG posted about $8 billion in annual losses each and required government assistance, and Emirates has cut about a third of its workforce to reduce costs.

Results

• Emirates airline reported a loss of 20.3 billion dirhams versus 1.1 billion dirhams profit in the previous year
• Dnata, the ground-handling unit, reported a loss of 1.8 billion dirhams versus a 618 million dirhams profit
• One-off impairment charge of 710 million dirhams related to certain grounded aircraft which might not re-enter service before their scheduled retirement within the next financial year
• Load factor declined to 44.3% from 78.5%

Despite the majority of the A380 super-jumbo fleet being grounded, Emirates kept its order book for 200 aircraft “unchanged at this time.” The planned purchases include 115 of the new Boeing 777X plane, for which it is the biggest customer.

Emirates President Tim Clark has repeatedly lambasted the U.S. planemaker for delaying the 777X program and has raised concerns over the model’s performance. Bloomberg reported in February that Emirates could swap as many as a third of its 115 commitments for the 777-9 to the smaller Boeing 787 Dreamliner.

The carrier’s current fleet stands at 259 planes as of the end of March as it phased out 14 older aircraft.