The government of Dubai has injected 7.3 billion dirhams (US$2 billion) into the state-owned Emirates airline since the start of the COVID-19 pandemic, according to a private bond prospectus that has been seen by the Reuters news agency. In late March, the Crown Prince of Dubai, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum said the government would inject extra capital into the airline in order to keep it afloat but no further announcement was forthcoming.
The prospectus suggests a further injection of cash may follow in the coming months. “Any further support will be subject to the airline’s requirements and will depend on the impact and duration of the ongoing Covid-19 situation,” the document explains.
Earlier this month, Emirates’ president Sir Tim Clark suggested the airline hadn’t yet needed any government support, saying the business was “holding our own”. Sir Tim seemed in no doubt, however, that obtaining financial support from the Dubai government wouldn’t be hard, saying:
“The shareholder, Dubai, needs the airline – it’s critical to its existence. So they’re going to have to step up in the short term to help us out which they will do, no doubt. Then we’ll get through it and we’ll start putting cash back on our balance sheet”.
The airline’s chairman and chief executive, Sheikh Ahmed bin Saeed Al Maktoum has previously warned that the Corona crisis would likely have a “huge impact” on Emirates’ financial performance but the airline has not yet said how much it has lost after flights were grounded in March.
Emirates only resumed flights after a hiatus of nearly two months but despite plans to serve as many as 80 destinations in September, frequencies remain much reduced. Emirates recently revealed that its average passenger load factor was hovering around 40 per cent.
The amount of financial support currently offered to Emirates, however, pales in comparison to the state aid that some airlines have received. Lufthansa, for example, has received a €9 billion taxpayer-funded bailout, while the Air France-KLM group has secured €7.7 billion in government support.
Major U.S. airlines such as American, Delta and United, who have previously waged a fierce campaign against airlines in the Gulf over subsidies, have also received billions of dollars in aid in order to survive the COVID-19 pandemic. The chief executive’s of the big three U.S. carriers are backing a call for a second multi-billion-dollar payroll support program to avoid employee redundancies through to the end of March 2021.
Emirates has already made hundreds (possibly thousands) of employees redundant as part of “aggressive cost management measures”. Hundreds of pilots and cabin crew have been fired since June, although the airline has declined to confirm how many employees have been made redundant. Emirates is also continuing to encourage more workers to take unpaid leave in order to save costs.
