Ouch: Emirates Reports Record $3.4 Billion Loss

Emirates Group has just reported its results for the first half of the financial year (April 1 through October 30, 2020).

Unsurprisingly the airline group is reporting its biggest loss ever, following 32 years of straight profits (or at least that’s what the airline claims).

Emirates’ (unsurprising) record loss

Emirates Group has just shared its financial results for the first half of the financial year, as Emirates Group reported a loss of $3.8 billion, while Emirates Airline reported a loss of $3.4 billion. If my math is right, a $3.4 billion loss comes out to ~$18.6 million per day, ~$775,000 per hour, ~$13,000 per minute, ~$215 per second. Ouch.

Just to clarify the distinction, Emirates Group includes other subsidiaries, like dnata, which is an airport services provider.

Emirates Airline has reported a $3.4 billion loss

For the most part I’ll be focusing specifically on the results at Emirates Airline, because that’s what I find to be most interesting. As we look at Emirates Airline’s results, keep in mind that the airline had to suspend operations in March per directives from the government, and only restarted operations very gradually after several weeks.

With that in mind:

• Emirates revenue was down 75%, to $3.2 billion
• Emirates capacity shrunk by 91% measured in available seat kilometers
• Emirates capacity shrunk by 96% measured in passenger seat kilometers
• Emirates had an average load factor of 38.6%, compared to 81.1% pre-pandemic
• Emirates carried 1.5 million passengers over six months, down 95% from the same period last year
• Emirates operating costs were reduced by 52%
• Emirates fuel costs were 83% lower compared to the same period last year, due to a combination of a decrease in oil prices (down 49% compared to the same period last year), as well as a 76% decrease in demand due to lack of operations; fuel accounted for 11% of operating costs, compared to 32% of operating costs during the same period last year
• Emirates cargo volume decreased by 35%, while yields increased by 106% (wow)
• Emirates retired only three aircraft over the past six months, though most of the carrier’s fleet continues to be grounded

As far as Emirates Group overall goes:

• Emirates Group has $5.6 billion in cash as of September 30, 2020, compared to $7 billion in cash as of March 31, 2020
• The number of employees at Emirates Group as of September 30, 2020, has been reduced by 24%, to 81,334

Emirates had an average load factor of under 40%

Bottom line

Emirates’ losses for the first half of the financial year aren’t surprising, given that this covers the worst of the pandemic so far. Not only did the airline face most of the same challenges as other airlines, but it also dealt with the challenge of having operations suspended for several weeks, as well as being an exclusively international airline.

While Emirates is far from being in the clear, I imagine losses will narrow a bit in the second half of the financial year, as demand for international travel has picked up a bit, and the company has also lowered its costs, including through layoffs.

What do you make of Emirates’ results for the first half of the financial year?