Emirates Group Announces 2020-21 Results

Group records annual loss of AED 22.1 billion (US$ 6.0 billion) due to COVID-19 pandemic impact, its first non-profitable year in over three decades

• Group revenue of AED 35.6 billion (US$ 9.7 billion) impacted by worldwide travel restrictions and border closures during the entire financial year
• Results impacted by one-time impairment charges of AED 1.5 billion on Group’s non-financial assets
• Ends year with solid cash balance of AED 19.8 billion (US$ 5.4 billion)

Emirates reports a loss of AED 20.3 billion (US$ 5.5 billion) down from AED 1.1 billion (US$ 288 million) profit in the previous year

• Revenue declined by 66% to AED 30.9 billion (US$ 8.4 billion), due to the temporary suspension of passenger flights at its hub in March 2020 and ongoing global travel restrictions
• Airline capacity reduced to 24.8 billion ATKMs, with aircraft fleet size reduced by 11 aircraft

dnata reports a loss of AED 1.8 billion (US$ 496 million) down from AED 618 million (US$ 168 million) profit in the previous year

• Revenue declined by 62% to AED 5.5 billion (US$ 1.5 billion), reflecting the pandemic impact across all business divisions in the UAE and worldwide 
• Expands global footprint with the full acquisition of Destination Asia, and the opening of new catering and retail facilities

DUBAI, UAE, 15 June 2021 – The Emirates Group today announced its first year of loss in over 30 years caused by a significant drop in revenue, fully attributed to the impact of COVID-19 related flight and travel restrictions throughout its entire financial year 2020-21.

Released today in its 2020-21 Annual Report, 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. The Group’s cash balance was AED 19.8 billion (US$ 5.4 billion), down 23% from last year mainly due to weak demand caused by the various pandemic related business and travel restrictions across all of the Group’s core business divisions and markets.

His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive, Emirates Airline and Group, 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% to 75,145 employees, representing over 160 different nationalities.

Keeping a tight control on costs, across the Group, financial obligations were 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 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.

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 performance

Emirates’ total passenger and cargo capacity declined by 58% 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.

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 a youthful 7.3 years.

Emirates’ order book for 200 aircraft remains unchanged at this time. The airline is firmly committed to its long-standing strategy of operating a modern and efficient fleet, which underscores its “Fly Better” brand promise, as young aircraft are better for the environment, better for operations, and better for customers.

Working closely with aviation stakeholders to design and implement bio-safety measures, Emirates gradually restored its passenger network and hub connectivity from mid-June 2020 as the UAE re-opened for transit travellers and later for international arrivals.

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, to expand connectivity for its customers.

From zero scheduled passenger flights at the start of the financial year, to operations in over 120 destinations by 31 March 2021, Emirates has shown its ability to adapt and respond to challenges, and the resilience of its people and business model.

With significantly reduced and constrained capacity deployment across most markets, Emirates’ total revenue for the financial year declined 66% to AED 30.9 billion (US$ 8.4 billion). Currency fluctuations this year had no significant impact on airline revenue.

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.

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.

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), due largely to a favourable route mix, fares and continued healthy demand for premium seats. Seat load factor and yield results cannot be compared against the previous year’s performance due to the unusual pandemic situation.

In response to the pandemic, Emirates led the industry in developing new service and operating protocols to protect its customers and employees. During the year, it launched numerous customer initiatives such as: providing the industry’s first complimentary COVID-19 medical cover for all passengers; waiving fees so customers can rebook their travel without penalty; expediting refunds handling; and fast-tracking biometric processing and other technology projects that enhanced the travel experience while reducing contact at airport touchpoints.

Emirates invested 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, to better engage and serve travel trade partners.

For frequent flyers, Emirates Skywards offered generous extension on Tier status and Miles validity until 2022, and launched various initiatives to help its members earn and redeem rewards even if they are unable to immediately travel.

Emirates SkyCargo put in a stellar performance by rapidly responding to new demand in a changed global marketplace, contributing to 60% of the airline’s total transport revenue.

Emirates SkyCargo quickly scaled up operations and rebuilt its cargo network to meet strong 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% over last year.

Freight yield per Freight Tonne Kilometre (FTKM) increased strongly by 88%, due to the unique pandemic situation which led to significantly reduced cargo capacity in the market worldwide.

Tonnage carried decreased by 22% to reach 1.9 million tonnes, due to the reduced available bellyhold capacity for the entire year. At the end of 2020-21, Emirates’ SkyCargo’s total freighter fleet stood unchanged at 11 Boeing 777Fs.

Emirates’ hotels portfolio recorded revenue of AED 296 million (US$ 81 million), a decline of 49% over last year as the events business dried up and facilities had to shut temporarily due to the pandemic.

During the year, Emirates successfully restructured various aircraft leases and loans. The support from aviation lessors and financing partners during these challenging times reflects the financial community’s confidence in Emirates’ business model, and its mid to longer term prospects.

In addition to the AED 14.5 billion financing that was raised for aircraft and general corporate purposes in 2020-21, Emirates has already received committed offers to finance two aircraft deliveries due in 2021-22 and continues to tap the financial market for further liquidity to provide a cushion for the potential impact of COVID-19 on the business cash flows in the near term.

Emirates closed the financial year with cash assets of AED 15.1 billion (US$ 4.1 billion), a position which would have stronger if not for a one-time payout of AED 8.5 billion for customer refunds.

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% to AED 5.5 billion (US$ 1.5 billion). dnata’s international business accounts for 62% of its revenue.

dnata continued to lay the foundations for future growth with investments in 2020-21 amounting to AED 328 million (US$ 89 million). During the year, dnata completed the purchase of Destination Asia, bringing one of Southeast Asia’s top destination management companies fully under the dnata Travel Group umbrella. It also pressed ahead with key investments to strengthen the business including the opening of a new state-of-the-art cargo facility in Manchester; upgrades to technology across its leisure and corporate travel businesses; the setting up of a dedicated inflight retail centre of excellence in the UK to serve global customers; and the opening of its second catering facility in Dublin.

In 2020-21, dnata’s operating costs decreased by 48% 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.

dnata’s cash balance was AED 4.7 billion (US$ 1.3 billion), a decline by 12%. Cash used in financing activities, primarily payments for loans and leases, amounted to AED 548 million (US$ 149 million), while the business utilised net cash of AED 149 million (US$ 41 million) in essential investing activities. The business saw a positive operating cash flow of AED 10 million (US$ 3 million) in 2020-21 despite the sharp decline in revenues and the unprecedented volumes of refunds in its travel division.

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

The number of aircraft turns handled by dnata in the UAE declined by 59% to 78,000. This reflects the impact of the suspension of scheduled passenger flights at both Dubai airports (DXB and DWC) in March 2020 as part of the UAE’s pandemic containment measures. dnata’s cargo handling declined by 18% to 575,000 tonnes, reflecting the reduced available flight capacity in the overall air cargo market over the year.

dnata’s International Airport Operations division revenue declined by 43% to AED 2.3 billion (US$ 617 million), reflecting the broad impact of the global pandemic across markets. International airport operations continue to represent the largest business segment in dnata by revenue contribution.

The number of aircraft turns handled decreased by 57% to 211,000, on account of lower business volumes; whereas there was only a minor 5% decline in cargo handled to 2.1 million tonnes given the strong air freight demand across many markets.

During 2020-21, dnata’s Airport Operations division continued to strengthen its international reach and capability. In Singapore and Australia, it introduced new high-tech cool dollies to enhance its pharma and perishables handling capability; in Italy its subsidiary, Airport Handling SpA, partnered with Beta Trans to provide full cargo services to customers at Milan Malpensa Airport; and in Indonesia, dnata entered the market through a partnership with PT UNEX Rajawali Indonesia (UNEX) where both entities will make joint investments in ground handling facilities, equipment, and training.

dnata continued to win new contracts in 2020-21. Notably, in Australia dnata began ground handling for Qantas at most of its major airports and GTA dnata, its joint-venture company in Canada, was awarded a five-year ground handling license for ramp, passenger, and cargo warehousing services at Vancouver International Airport.

In 2020-21, dnata executed the US’s first green turnaround of a customer aircraft at New York JFK, an achievement made possible by its previous investments in zero-emission, electric ramp ground support equipment. Its airport services brand, marhaba, opened an expanded and refurbished lounge at Dubai International airport, and expanded its international network with a new lounge in Manila’s Ninoy Aquino International Airport.

dnata’s Catering business accounted for AED 1.0 billion (US$ 285 million) of dnata’s revenue, significantly down by 68%. The inflight catering business uplifted nearly 16.9 million meals to airline customers, a substantial decrease of 82%. 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.

Progressing with key investments for its future growth, dnata Catering inaugurated a second state-of-the-art catering facility in Dublin, introduced new bio-digesters to reduce food waste across its operations, and solar panels at its Singapore facility as part of its commitment to reduce its environmental footprint.

Revenue from dnata’s Travel Services division has declined by 96% to AED 130 million (US$ 35 million). The reported total transaction value (TTV) of travel services sold declined by 98% to AED 229 million (US$ 62 million). Excluding the impact of COVID-19 related cancellation of bookings, revenue from Travel division declined by 89% to AED 294 million and the TTV dropped by 83% to AED 1.7 billion.

dnata’s Travel division saw corporate and leisure travel demand dry up across markets.

Throughout an incredibly tough year with a fast-changing global travel environment, dnata’s Travel division focussed on initiatives to support its customers and provide value. Across its travel brands, dnata helped its customers rebuild traveller trust by processing refunds and rebookings, and providing the latest travel information.

dnata Travel Group continued to secure growth opportunities. During the year, it provided online booking capability for London City Airport in the UK, and expanded its reach in Oman through a partnership with OUA Travel that enables Oman-based trade agents to promote and sell Gold Medal’s wide range of travel products to their customers.

In the UAE and GCC region, dnata’s Travel business remained steady. dnata leveraged its established home market presence and the re-opening of Dubai for international travel to promote the UAE, and its UAE-based tour operating division Arabian Adventures started new experiences.

The full 2020-21 Annual Report of the Emirates Group – comprising Emirates, dnata and their subsidiaries – is available at: www.theemiratesgroup.com/annualreport

-ENDS-

US$ figures are converted at 1US$ = 3.67AED and are based on the AED figures rounded off in millions.