Emirates chief expects 'steep' travel demand recovery despite Covid-induced first half loss

Emirates, the world's major long-haul carrier, swung to a loss in the first half of the year as a result of the impact of the Covid-19 pandemic on the travel industry but expects a solid rebound popular on the trunk of a vaccine.

The company reported a Dh12.6 billion ($3.4bn) loss for the first half a year of 2020-21 compared with a half-year profit of Dh862m last year, the company said in a statement on Thursday. Revenue dropped 75 % to Dh11.7bn in the period.

For the first time in over 30 years, Emirates Group, which includes airport and travel services arm dnata, posted a lack of Dh14.1bn, compared with a profit of Dh1.2bn in the year-earlier period. Revenue fell 74 per cent to Dh13.7bn. Dnata reported a loss of Dh1.5bn weighed against a Dh311m profit in the same period a year earlier, as income dropped 67 % to Dh2.4bn.

"We commenced our current financial year amid a worldwide lockdown when air passenger traffic was at a literal standstill," Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive of Emirates airline and group, said. "No-one can predict the near 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."

Earlier this week Pfizer and BioNTech said a Covid-19 vaccine being developed by them was found to become more than 90 % effective in phase 3 trials - the ultimate stage before commercial licensing.

The Covid-19 pandemic has claimed over 1.29 million lives globally by Thursday, tipped the world economy right into a recession and brought the travel industry to a grinding halt. The health crisis forced airlines to severely scale back their businesses and ground aircraft, with many cash-strapped carriers furloughing personnel or cutting jobs within cost curbing measures.

The plunge in flights has put 4.8 million jobs in the aviation industry at risk and government action is necessary globally to supply financial support to the industry and safely reopen borders, in line with the International Air Transport Association and the International Transport Workers’ Federation.

Cathay Pacific, American Airlines, United Airlines, British Airways, Lufthansa, and other carriers have cut thousands of jobs in recent months with many planning to reduce their workforce further.

Emirates Group has reduced its headcount by 24 % because of the end of March 2020, to 81,334 as of the end of September, according to the statement.

"This is based on the company’s expected capacity and business activities later on and general industry outlook," the business said. "Emirates and dnata continue steadily to look at every methods to protect its skilled workforce, including participating in job saver programmes where these exist."

Last month, Iata said it expects global airlines to burn through $77bn of cash in the next half of 2020 as the decline in earnings outpaces cost savings and various government wage subsidy programmes learn to expire.

“As passenger traffic disappeared, Emirates and dnata have already been able to rapidly pivot to serve cargo demand and other pockets of opportunity," Sheikh Ahmed said. "It has helped us recover our revenues from zero to 26 per cent of our position same time this past year.

“Emirates Group’s resilience in the face of current headwinds is testimony to the effectiveness of our business design, and our years of continued investment in skills, technology and infrastructure which are actually paying off when it comes to cost and operational efficiency," he added.

Strong branding and agile digital features have helped Emirates and dnata "respond adeptly to the accelerated shift of customer and business activities online in the last six months”, Sheikh Ahmed said.

Sheikh Ahmed said Emirates was able to use its strong cash reserves, and through the Dubai government and the broader financial community, ensure it has access to sufficient funding to sustain the business enterprise through the challenging period. The Dubai government, which injected $2bn into Emirates by method of an equity investment in March, "will support us on our recovery path”, he said.

Emirates carried 1.5 million passengers right away of April to the finish of September, 95 per cent fewer than the same period this past year.

The volume of cargo uplifted at 0.8 million tonnes decreased 35 %, while yield has a lot more than doubled.

Iata expects full-year traffic for 2020 to be 66 % lower than this past year. Last month it said total industry revenues next year are anticipated to be 46 % lower than in 2019, at $838bn.