Emirates Group has reported a 28% drop in profits year on year, citing a runway closure at Dubai International and the coronavirus crisis as reasons for the dip.
The group, which owns Emirates and dnata, recorded profits of $456 million for the financial year ending March 31, down 28% from last year, while the group’s revenues saw a decline of 5% to $28.3 billion. It finished the year with a cash balance of $7 billion, up 15% from the year prior.
Emirates Airline and Group chairman and chief executive Sheikh Ahmed bin Saeed Al Maktoum said the company’s financials had been strong, but the emergence of the pandemic had meant things “changed rapidly”. Due to the current climate, the group will not pay a dividend to shareholders for this financial year.
He said: “For the first 11 months of 2019-20, Emirates and dnata were performing strongly, and we were on track to deliver against our business targets. However, from mid-February things changed rapidly as the Covid-19 pandemic swept across the world, causing a sudden and tremendous drop in demand for international air travel as countries closed their borders and imposed stringent travel restrictions.”
Dubai’s state carrier Emirates Airline reported a 21% increase in its full-year profit, however the chairman said the pandemic would have a huge impact on the coming year’s performance due to the “drying up of flight traffic and travel demand all around the world”.
He added: “We continue to take aggressive cost management measures, and other necessary steps to safeguard our business, while planning for business resumption. We expect it will take 18 months at least, before travel demand returns to a semblance of normality.”
To protect its cash flow, the airline said it had “partially drawn existing credit lines: before March 31 and is now working to secure additional lines of credit to improve the liquidity buffer as it seeks to “provide a cushion against the impact of Covid-19”.
The group’s financial report said revenue from dnata’s travel portfolio had declined by 4% to $964 million.
It cited “weak travel demand” as having a negative impact on business performance, particularly for its B2C businesses in the UK and Europe.
As a result, the management team has begun a strategic business review of its entire travel portfolio which will be completed in the first quarter of 2020-21. As part of the review, dnata has written off $35 million for “goodwill impairments” for the UK travel B2C brands.
The results show that the Group was forced to write-off $26 million from its travel and catering divisions due to the Thomas Cook failure.
It said the UK business had “experienced significant headwinds” due to the collapse of Thomas Cook and its impact on its B2B business.