Emirates Group has announced its first year of loss in over 30 years caused by a significant drop in revenue attributed to the impact of COVID-19 related flight and travel restrictions throughout its entire financial year 2020-21.
The Emirates Group posted a loss of AED 22.1 billion (US$ 6.0 billion) for the financial year ended 31 March 2021 compared with an AED 1.7 billion (US$ 456 million) profit for last year. The Group’s revenue was AED 35.6 billion (US$ 9.7 billion), a decline of 66% over last year’s results.
Due to ongoing pandemic-related flight and travel restrictions, the airline reported a loss of AED 20.3 billion (US$ 5.5 billion) after last year’s AED 1.1 billion (US$ 288 million) profit, and a negative profit margin of 65.6%. This includes a one-time impairment charge of AED 710 million (US$ 193 million) mainly relating to certain aircraft which are currently grounded and are not expected to return to service before their scheduled retirement within the next financial year.
“The COVID-19 pandemic continues to take a tremendous toll on human lives, communities, economies, and on the aviation and travel industry. 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,” said His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group.
“Our top priorities throughout the year were: the health and wellbeing of our people and customers, preserving cash and controlling costs, and restoring our operations safely and sustainably. Emirates received a capital injection of AED 11.3 billion (US$ 3.1 billion) from our ultimate shareholder, the Government of Dubai, and dnata tapped on various industry support programmes and availed a total relief of nearly AED 800 million in 2020-21. These helped us sustain operations and retain the vast majority of our talent pool. Unfortunately, we still had to make the difficult decision to resize our workforce in line with reduced operational requirements.”
Redundancies were implemented across all parts of the business, which reduced the group’s total workforce by 31% to 75,145 employees. Emirates also control costs by restructuring financial obligations, renegotiating contracts, consolidating operations and streamlining processes, saving AED 7.7 billion during the year.
Sheikh Ahmed said: “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.”
He concluded: “In the year ahead, we will continue to adopt an agile approach in responding to the dynamic marketplace. 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.”
Emirates received three new A380 aircraft during the financial year and phased out 14 older aircraft comprising of 9 Boeing 777-300ERs and 5 A380s, leaving its total fleet count at 259 at the end of March. Emirates’ average fleet age remains at 7.3 years. Emirates’ order book for 200 aircraft remains unchanged.
Emirates airline total operating costs decreased by 46% from last financial year. Cost of ownership (depreciation and amortisation) and employee cost were the two biggest cost components for the airline in 2020-21, followed by fuel, which accounted for 14% of operating costs compared to 31% in 2019-20. The airline’s fuel bill declined by 76% to AED 6.4 billion (US$ 1.7 billion) compared to the previous year, driven primarily by 69% lower uplift in line with capacity reduction.
Emirates carried 6.6 million passengers (down 88%) in 2020-21, with seat capacity down by 83%. The airline reports a Passenger Seat Factor of 44.3%, compared with last year’s passenger seat factor of 78.5%; and a 48% increase in passenger yield to 38.9 fils (10.6 US cents) per Revenue Passenger Kilometre (RPKM).
Emirates SkyCargo contributed to 60% of the airline’s total transport revenue. Emirates SkyCargo quickly scaled up operations and rebuilt its cargo network to meet strong demand. It supplemented its existing freighter capacity by bringing into service 19 “mini freighters” - modified Boeing 777-300ER passenger aircraft with seats in the economy cabin removed to make room for more cargo. The cargo division also introduced new loading protocols to safely utilise overhead bins and passenger seats to carry cargo.
With the strong demand in air freight throughout the year, Emirates’ cargo division reported a revenue of AED 17.1 billion (US$ 4.7 billion), an increase of 53% over last year.
Freight yield per Freight Tonne Kilometre (FTKM) increased strongly by 88%. Tonnage carried decreased by 22% to reach 1.9 million tonnes. Emirates’ SkyCargo’s total freighter fleet stands unchanged at 11 Boeing 777Fs.