COVID-19: Dubai to inject new equity into Emirates airline

Dubai's Crown Prince Sheikh Hamdan bin Mohammed said on Tuesday the government is committed to fully support Emirates airline and will inject fresh equity into the company to help it overcome the coronavirus crisis.

The Dubai Government will inject fresh equity into Emirates airline, according to a statement issued by the emirate. The Government is "fully committed to supporting Emirates airline in the current critical period," the statement added.

"As a shareholder of Emirates airlines, the Government will inject equity considering its strategic importance to the Dubai and UAE economy and the airline's key role in positioning Dubai as a major international aviation hub. Worldwide, airlines are in line to lose as much as $252 billion this year, according to IATA, the industry grouping. This was the third upward revision IATA had to make in recent weeks, as the true scale of the virus pandemic became apparent. Also becoming clearer by the day was that only governments could help out airlines out of their current predicament. The US has shown the way by announcing $61 billion for its airline industry.

Other countries are expected to come up with their own support systems. Emirates has a "strategic importance to the Dubai and UAE economy and the airlines (have a) key role in positioning Dubai as a major international aviation hub", Sheikh Hamdan said in a Twitter post.

Further details in this regard will be announced at a later stage, said Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai. Minimise job losses… and the disruption to the economy that comes with lots of redundancies happening at the same time.

This is what the UAE Government has set out to do on a priority basis in its response to the COVID-19 outbreak and to lessen its impact on the economy. The announcement by Dubai Free Zones Council on Saturday gives an indication of that strategy.

The Council confirmed that temporary work contracts will be issued that would allow the "free movement" of workers between companies operating in the free zones for the rest of the year. This move will also "benefit workers seeking better job opportunities, and those who have been granted unpaid leave by facilitating their reemployment in jobs in Dubai," the Council said in a statement.

What this means is that a business finding itself saddled with excess workforce can provide them to other companies within the free zones. At the individual level, it lessens their risk of confronting a sudden job loss and then having to spend months looking for an alternative. The Dubai Free Zones Council's could well be the template that other emirates can follow to reduce the risk of mass layoffs in the near-term. Dubai's free zones are a base for 44,985 companies that provide for a combined 389,336 jobs.