The bailouts continue in the debt-stressed airline industry as the resumption of full international flying continues to look as distant as ever.
This week saw the huge Middle East carrier Emirates net an extra $US1.1 billion in state support from Dubai in perhaps the best sign for a while of the reality of an international restart for the world’s struggling airlines.
The new money for Emirates means more than $US8 billion has come from gulf governments in Abu Dhabi, Qatar and Dubai in the past year, plus an unknown amount of soft (non-cash aid) to keep the three airlines of the region – Emirates, Etihad and Qatar, aloft during the worst crisis aviation has seen.
Governments around the world have pumped tens of billions of dollars into airlines to keep them afloat during the pandemic and more will be needed, if the extra cash for Emirates is any guide.
Emirates, which is state-owned, has now received $US3.1 billion in equity injections from the Dubai government, including $US2 billion disclosed last year.
The carrier reported a $US5.5 billion full year loss (to March 31) this week compared to a $US288 million profit a year ago, as revenue plunged 66% to $US8.4 billion. It was the airline’s worst performance for decades and came despite the sacking of tens of thousands of employees in the airline and the group as a whole last year.
Emirates said the government, its sole shareholder, would continue to support the airline.
The state aid to Emirates is similar to the $US3 injected into rival airline, Qatar Airways, which is due to report its annual results shortly.
The other major Middle East carrier, Etihad lost more than $US1.9 billion in 2020 and it has also been bailed out – to the tune of just on $US2 billion.
The Gulf airlines have no domestic market unlike airlines in Europe, Australia and the US.
Singapore Airlines is in the same position and it has been bailed out to the tune of more than $US13 billion in various forms of help from the national government and its various investment arms. Singapore lost $US3.2 billion in 2020-21.
The absence of a domestic markets means these massive carriers are fully exposed to the crunch on global travel and won’t be able to operate freely until vaccinations and more drugs to treat Covid, become available and allow the slow re-opening of national borders.
Nearly all airlines have stepped up their international freight business which from all reports is booming. Emirates has converted 19 of its 145 Boeing 777s to freight configuration to meet the increased demand.
Emirates Chairman Sheikh Ahmed bin Saeed Al Maktoum said in the airline’s annual report this week that the recovery from the pandemic would be patchy, cautioning that no one could predict when the industry’s worst crisis would end.
Emirates carried 6.6 million passengers this year – the lowest number in two decades. The airline said it had filled just 44.3% of all seats in the past year, down from an average of 78.4% in the 2018-19 year.
Capacity was cut by 82.6% compared to the previous years as operations centered around the airline’s 146 Boeing 777s with most of Emirates’ 113 Airbus A380s grounded. Four additional A380s have been removed from operation and are unlikely to return before their scheduled retirement, it said.
Emirates Group, the airline’s holding company that includes other aviation and travel assets, saw revenue fall 65.8% to $US9.7 billion and made a loss of $US6 billion, its first ever.
The Group’s workforce shrank by 30.8% to 75,145 including 20,000 jobs at the airline, the annual report revealed.
