Struggling Emirates could pose problems not only for the airline
Emirates is arguably one of the most prestigious airline brands in the world. The airline not only tries its best to attract customers by the one-of-a-kind luxury onboard its aircraft, but also by very aggressive branding throughout various events, including the World Expo that is set to be hosted in Dubai, United Arab Emirates, the home of the carrier.
The airline group managed to achieve a profit for 32 years in a row, out of its total 35 years of existence. Despite consecutive profits, though, the airline has showcased troubling signs since its peak in FY2016, when its profit margins dropped to 1.5% in FY2017, a fall of 6.9%.
Newest results, published on May 11, 2020, indicate that its profit margins have barely stayed afloat, as Emirates managed to reach a 1.1% margin. In total, the airline reported a profit of $288 million (AED1.1 billion), an increase of $51 million compared to the previous year. However, Emirates’ revenues took a hit, as such events like the Dubai International Airport (DX) runway closure and the decision to suspend flights at the end of the airline’s financial year in March 2020.
But this could only be the beginning of a long and bloody uphill battle. As the COVID-19 pandemic has sent the world into lockdown, the outlook for air travel looks grim. Executives, ranging from the manufacturers to airlines, are predicting that 2019 levels of travel are only set to return in a couple of years’ time. For an airline like Emirates, that has only grown massively in terms of its fleet size and the capacity, the post-coronacrisis world could be a difficult situation to manage.
Wide-body and proud
Emirates is one of the few all-wide-body airlines in the world. The two-type Airbus A380 and Boeing 777 operator stands proud of its fleet, as it highlighted in its latest results’ report. It is both the largest customer of the Airbus A380 and the Boeing 777. But both, are seemingly singing their swan songs – the company has orders for 50 Airbus A350 and 30 Boeing 787 Dreamliner aircraft, both of which are set to join the Emirates’ fleet starting from 2023.
While it is certainly an impressive feat to upkeep such a fleet and still post a profit even during the most troubling times, including the post-9/11 shock and the difficulties that the global economy faced following the financial crisis of 2008, the coronavirus-induced health and financial crisis is no repetition of those downturns in aviation. Passengers now question whether traveling is safe. Business travelers, on the other hand, are forced to talk to their partners on various conferencing platforms, questioning not only the ability to make sales over the internet but also to unmute their microphones.
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