Emirates Airline could approach government for cash or take on more debt

President Sir Tim Clark said if passenger demand does not recover over the summer, the airline will 'make recommendations' to the government about raising more cash

  
Emirates welcomes its 116th A380 as the first of three A380s to join its fleet in 2020. Image used for illustrative purpose.

Emirates welcomes its 116th A380 as the first of three A380s to join its fleet in 2020. Image used for illustrative purpose.

If the demand for air travel does not pick up by the end of 2021, Dubai’s Emirates may have to approach the government to raise more cash via an equity injection or will have to take on more debt on its balance sheet.

The state carrier’s President Tim Clark told the World Aviation Festival that an expected uptick in passenger numbers had not yet materialised as expected and if demand did not increase, the airline would ‘make recommendations’ to the government as to how it should proceed to raise funds.

“As far as Emirates is concerned, we are good for another six, seven or eight months in terms of cash, we have sufficient cash coming in to be able to keep the day to day operations at a neutral basis,” he said.

“But like everybody else, if in six months, global demand is where it is today, then we’re all going to face difficulties, not just Emirates.”

He continued: “We will make the recommendations to the government as to where we go about raising more cash. One of those could be a further injection of equity from the shareholder, the government itself, others will be taking more debt on to the balance sheet.

“The balance sheet is pretty strong regardless of what’s already happened, so we’re ok there. There are other measures we could take so we are preparing ourselves for that case.”

In August 2020, Emirates received 7.3 billion dirhams ($2 billion) from the government of Dubai, its sole shareholder,  to overcome a cash crunch caused by the COVID-19 pandemic.

Clark said the airline was currently flying 151 Boeing 777 aircraft, carrying ‘mainly cargo’ and between 20,000-30,000 passengers per day.

Emirates-flydubai nexus

Despite the enormous challenges faced by the aviation industry under the COVID-19 pandemic, he spoke optimistically about the future of the Emirates, specifically regarding collaboration with low-cost carrier flydubai.

After the pandemic, Dubai has the potential to return to its status as a major international hub, operating upwards of 400-500 aircraft to 400 cities, he said. 

He said that a plan was being considered where the two airlines work together with their brands kept separate but with network integration. Such a collaboration, he said, would allow "absolutely stupendous" income power.

Asked if he was concerned about competition from Qatar Airways, after the country’s relations with other Gulf states started to normalise in January, Clark said: “Well, frankly I’m not particularly concerned what comes out of Doha. I would rather we concentrated on what we need to do best for ourselves.”

“What we would like to see as part of this pandemic, when it is over, is that the airline industry restores itself to health, restores itself to the competitive nature of the way it was, consumers have choice and value for money,” he added. 

(Reporting by Imogen Lillywhite; editing by Seban Scaria)

 imogen.lillywhite@refinitiv.com

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