UAE airlines brave Covid headwinds
dubai The UAE airlines are using all possible means such as loan deferment, payment holidays, staff layoffs and unpaid leave for staff to stay afloat in present challenging environment to offset the impact of coronavirus outbreak.
In addition, the airlines save available liquidity as they look towards a gradual return to service in the aftermath of Covid-19 pandemic.
The local carriers are engaged with industry stakeholders including banks, lessors, suppliers and airport authorities for favourable payment terms and discounts to lessen the impact of pandemic that will help them in a smooth take off once the pandemic recedes in coming months.
“Like all airlines, Emirates’ ability to operate has been temporarily impaired by the Covid-19 pandemic which has resulted in global restrictions on flights and travel,” an Emirates spokesperson told Khaleej Times. “We are working
closely with our suppliers, partners, and lessors to develop pragmatic solutions to our current operating constraints, and against the projected industry outlook in the coming months,” the spokesperson said.
Emirates said it asked all departments have been asked to review costs.
We are working closely with our suppliers, partners, and lessors to develop pragmatic solutions to our current operating constraints
Emirates airline spokesperson
The four major UAE carriers have excellent credit ratings and ability to harness these low lending rates to bolster their financial muscle
Saj Ahmad,
Chief analyst at StrategicAero Research
Saj Ahmad, chief analyst at StrategicAero Research, said the strength of key carriers like Emirates, who still sit atop a robust cash balance of some $7 billion, accessing new liquidity should not be an issue for them, or indeed, other UAE airlines.
“Lending rates sat at very low interest rates and this is why we have seen many governments tap into funds to help cover the cost of furlough schemes and other financial assistance and bailouts to different industries,” he said.
“The four major UAE carriers have excellent credit ratings and ability to harness these low lending rates to bolster their financial muscle to ensure not just that they have enough working capital to cover the fixed costs of their operations but the added liquidity,” he added.
In order to support local businesses, the UAE Central Bank announced Dh50 billion facility at zero interest as part of its Dh256 billion stimulus package for local banks to extend support to companies and individuals with loan deferment.
The facility is open to private businesses in the aviation sector as well.The UAE airlines have 633 aircraft on order worth an estimated $135 billion. The major expenses for the UAE carriers are fuel, labour, airplane fees (if leased/financed), airport fees (parking, handling, catering, energy), logistics, legal/counsel, insurance and taxes.
Abu Dhabi-based Etihad Airways said the national carrier is “working closely with major industry partners on its global supply chain to arrange more favourable payment terms during the current period.”
The UAE’s budget carriers flydubai and Air Arabia are also looking at shortterm and long-term liquidity management issues.