The Emirates Group has announced its first year of loss in over 30 years as a result of the Covid-19 pandemic with a loss of AED 22.1 billion (US$ 6.0 billion), compared with a profit AED 1.7 billion (US$ 456 million) for the previous year.

Its 2020-21 Annual Report showed that the group’s revenue was AED 35.6 billion (US$ 9.7 billion), a decline of 66 per cent over last year’s results. The group’s cash balance was AED 19.8 billion (US$ 5.4 billion), down 23 per cent.

Emirates Airline and Group chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum (pictured below), said: “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.

“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.”

For the first time in the Group’s history, redundancies were implemented across all parts of the business. As a result, the Group’s total workforce reduced by 31 per cent to 75,145 employees, representing over 160 different nationalities.

Financial obligations were also restructured, contracts renegotiated, processes examined and operations consolidated. The various cost reduction initiatives returned an estimated saving of AED 7.7 billion during the year.

In 2020-21, the Group collectively invested AED 4.7 billion (US$ 1.3 billion) in new aircraft and facilities, the acquisition of companies, and the latest technologies to position the business for recovery and future growth. It said that it also continued to invest resources towards environmental initiatives, as well as supporting communities and incubator programmes that nurture talent and innovation to drive future industry growth.

The chairman and chief executive added: “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 performance

Emirates’ total passenger and cargo capacity declined by 58 per cent to 24.8 billion ATKMs at the end of 2020-21, due to pandemic related flight and travel restrictions including a complete suspension of commercial passenger services for nearly eight weeks as directed by the UAE government from 25 March 2020.

Despite this, Emirates SkyCargo put in a “stellar performance” and contributed to 60 per cent of the airline’s total transport revenue.

Emirates SkyCargo quickly scaled up operations and rebuilt its cargo network to meet demand from shippers who faced a capacity crunch when the pandemic forced airlines to drastically reduce flights. 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.

In addition to supporting global supply chains for food, medical and other trade items, Emirates SkyCargo also tapped on its pharma capabilities and infrastructure to support the worldwide distribution of Covid-19 vaccines and humanitarian relief to Lebanon in the aftermath of the Port of Beirut explosions.

In October, Emirates SkyCargo set up a dedicated GDP-certified airside hub in Dubai for Covid-19 vaccines, and later it partnered with UNICEF to facilitate the rapid transport of Covid-19 vaccines to developing nations through Dubai.

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 per cent over last year.

Freight yield per Freight Tonne Kilometre (FTKM) increased by 88 per cent and tonnage carried decreased by 22 per cent to reach 1.9 million tonnes. This was due to the reduced available bellyhold capacity. At the end of 2020-21, Emirates’ SkyCargo’s total freighter fleet stood unchanged at 11 Boeing 777Fs.

Emirates received three new A380 aircraft during the financial year and phased out 14 older aircraft comprising of nine Boeing 777-300ERs and five A380s, leaving its total fleet count at 259 at the end of March.

Emirates’ order book for 200 aircraft remains unchanged at this time.

During the year, Emirates reactivated its strategic codeshare partnership with flydubai, and entered into agreements with new partners TAP Air Portugal, FlySafair, and Airlink in South Africa.

With significantly reduced and constrained capacity deployment across most markets, Emirates’ total revenue for the financial year declined 66 per cent to AED 30.9 billion (US$ 8.4 billion).

Total operating costs decreased by 46 per cent from last financial year. Cost of ownership and employee cost were the two biggest cost components for the airline in 2020-21, followed by fuel, which accounted for 14 per cent of operating costs compared to 31 per cent in 2019-20. The airline’s fuel bill declined by 76 per cent to AED 6.4 billion (US$ 1.7 billion) compared to the previous year, driven primarily by a 69 per cent lower uplift in line with capacity reduction.

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 per cent. 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.

Emirates carried 6.6 million passengers (down 88 per cent) in 2020-21, with seat capacity down by 83 per cent. The airline reports a Passenger Seat Factor of 44.3 per cent, compared with last year’s passenger seat factor of 78.5 per cent; and a 48 per cent increase in passenger yield to 38.9 fils (10.6 US cents) per Revenue Passenger Kilometre (RPKM).

Emirates invested also to upgrade its signature A380 experience with new Premium Economy seats and other product enhancements. It also launched new technology platforms Emirates Partners Portal and Emirates Gateway.

dnata performance

The impact of Covid-19 was felt across all dnata businesses, and in 2020-21 dnata recorded a loss of AED 1.8 billion (US$ 496 million) for the first time. This includes impairment charges of AED 766 million (USD 209 million) on goodwill and other intangible assets across all its divisions.

With reduced flight and travel activity across the world, dnata’s total revenue decreased by 62 per cent to AED 5.5 billion (US$ 1.5 billion). dnata’s international business accounts for 62 per cent of its revenue.

In 2020-21, dnata’s operating costs decreased by 48 per cent to AED 7.4 billion (US$ 2.0 billion), in line with reduced operations in its Airport Operations, Catering and Travel divisions across the world.

Revenue from dnata’s UAE Airport Operations, including ground and cargo handling declined to AED 1.7 billion (US$ 455 million).

dnata’s cargo handling declined by 18 per cent to 575,000 tonnes, reflecting the reduced available flight capacity in the overall air cargo market over the year.

dnata’s Catering business accounted for AED 1.0 billion (US$ 285 million) of dnata’s revenue, significantly down by 68 per cent. The inflight catering business uplifted nearly 16.9 million meals to airline customers, a substantial decrease of 82 per cent. This is primarily due to the full year impact of the pandemic situation including a nearly 12-month shut down of the facilities in Australia which dnata had acquired only two years ago.

Through the year, the catering division adapted its products and services to meet new customer requirements, including the provision of meals for quarantine facilities. It also worked with local organisations in Australia, Ireland, Italy and the UK to support communities in need.