Emi­rates Raises Debt For His­toric Dif­fi­cul­ties

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Emi­rates, one of the world’s big­gest long-haul air­lines, said it will raise debt to help it through the coro­n­avirus pan­demic,may have to take tougher mea­sures as it faces the most dif­fi­cult months in its his­tory.

The state-owned air­line, which sus­pended reg­u­lar pas­sen­ger flights in March due to the virus out­break that has shat­tered global travel de­mand, said that a re­cov­ery in travel was at least 18 months away.

Per­for­mance

It re­ported a 21 per cent rise in profit for its fi­nan­cial year that ended on March 31, but said the pan­demic had hit its fourth quar­ter per­for­mance and it would tap banks to raise debt in its first quar­ter to lessen the im­pact on cash flows by the virus.

The air­line, which has been promised fi­nan­cial aid from its Dubai state owner, did not say how much it ex­pected to raise.

“The COVID-19 pan­demic will have a huge im­pact on our 2020-21 per­for­mance,” chair­man Sheikh Ahmed bin Saeed said in a state­ment.

“We con­tinue to take ag­gres­sive cost man­age­ment mea­sures, and other nec­es­sary steps to safe­guard our busi­ness, while plan­ning for busi­ness re­sump­tion.”

In an in­ter­nal email sent to staff and seen by Reuters, Sheikh Ahmed said the months ahead would be the most dif­fi­cult in the air­line’s 35-year his­tory.

“At some point, if our busi­ness sit­u­a­tion doesn’t im­prove, we will have to take harder mea­sures,” he said in the email.

Emi­rates Group

Emi­rates Group, which counts the air­line among its as­sets, said it will not pay an an­nual div­i­dend to its share­holder, Dubai’s state fund.

Its cash as­sets stood at AED$25.6

(FJ$321.53 b), it said.

Dubai ruler Sheikh Mo­hammed bin Rashid al-Mak­toum said in the group’s an­nual re­port, re­leased on Sun­day,that he was con­fi­dent Emi­rates would emerge from the cri­sis strong, and a global leader in avi­a­tion. Dubai said in March that it would in­ject fund­ing into the air­line.

Emi­rates said in the an­nual re­port that Dubai would fi­nan­cially sup­port the air­line bil­lion if it was re­quired.

An Emi­rates spokes­woman said Dubai’s com­mit­ment to pro­vide it with “eq­uity in­jec­tions” would al­low it to “pre­serve its skilled work­force.”

“It would also al­low it to be ready to re­sume flights when pos­si­ble and con­tinue to op­er­ate cargo and other ser­vices,” she added.

Hub Model

The air­line made a profit of AED$1.1 bil­lion (FJ$0.67 bil­lion) in the year to March 31, up from AED$871 mil­lion (FJ$532 mil­lion) a year ear­lier, it said.

How­ever, it cau­tioned that the virus out­break had hit its fi­nal quar­ter.

Mea­sures In March, Emi­rates also tem­po­rar­ily cut staff pay due to the coro­n­avirus pan­demic. It is not clear when Emi­rates will re­sume nor­mal flights. Ri­val Qatar Air­ways has said it would be­gin re­build­ing its net­work from this month, while Abu Dhabi’s Eti­had Air­ways plans to re­sume reg­u­lar flights from June. In­ter­na­tional con­nec­tiv­ity is cru­cial for

Emi­rates’ Gulf hub model, which trans­formed Dubai six years ago into the world’s busiest in­ter­na­tional air­port.

It does not op­er­ate do­mes­tic flights and most of its pas­sen­gers transit through its hub.

Dubai Na­tional Air Trans­port As­so­ci­a­tion

Emi­rates sis­ter com­pany Dubai Na­tional Air Trans­port As­so­ci­a­tiond (dnata) saw profit drop by 57 per cent in the year through March 31 to AED$618 mil­lion (FJ$378 mil­lion), which the com­pany at­trib­uted to in­vest­ments in its ca­ter­ing and air­port ser­vices di­vi­sions and weak de­mand in its travel busi­ness.

Profit at the Emi­rates Group, which also in­cludes dnata, fell 28 per cent to AED$1.7 bi (FJ$1.0b).

Rev­enue was down 4.8 per cent to AED$104 bil­lion (FJ$ 63.62 bil­lion).

Un­favourable cur­rency ex­change rates cost the Group 1 bil­lion dirham in profit, it said, while it saw some respite from cheaper oil prices.Source:

Photo:

Emi­rates Air­line Boe­ing 777-300ER planes are seen at Dubai In­ter­na­tional Air­port in Dubai, United Arab Emi­rates. REUTERS/Christo­pher Pike

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