An Emirates Airbus 380-800 about to land.
Fabrizio Gandolfo | SOPA Images | LightRocket | Getty Images
Emirates expects to return to profitability in the next two years, as new travel corridors open and the global aviation industry attempts to recover from the worst crisis in its history.
“I believe that within the next 18 months, two years, we will return to profitability,” Emirati President Tim Clark told CNBC on Sunday in an exclusive interview.
“We will definitely be positive for liquidity over the back end next year, returning to profitability in (financial year) 2022-2023,” he added.
Earlier this week, Emirates Group posted a loss of $ 3.8 billion for the first half of the year, its first loss in 30 years, as coronavirus-related lockdowns blocked global air passenger travel . Revenues plummeted 74% to $ 3.7 billion.
“There are many things that can change that,” Clark said, pointing to a number of key concerns that still loom over the industry. “We are an international company that trades all over the world”.
His comments come after IATA’s new warnings that the industry cannot cut costs enough to neutralize heavy money losses and avoid bankruptcy in 2021.
“Cash is king,” Clark said. “As long as we can keep our cash position in good shape, we believe we will be ready to re-enter the markets, as we always have.”
Emirates said it is drawing on its cash reserves to make sure it has access to sufficient funding to support operations. It has cut nearly 25% of its staff and the Dubai government has stepped in to inject $ 2 billion via an equity investment in an effort to bolster its recovery.
“We believe things will recover pretty quickly. I’m not one of those people who believe it will take a long time or that it won’t be back to the way it was before,” added Clark.
“I tend to believe that we will be as good as in the days before Covid as an airline.”
UK-UAE travel corridor
The UK this week added the UAE to its list of travel corridors, meaning travelers flying from the UAE to the UK after November 14 will no longer have to isolate themselves for 14 days.
“The government has been working for five months to try to persuade the UK government that we should be on their list,” Clark said, praising the decision as “a major boost to tourism in terms of travel between the two countries.”
The UK is among the Emirates network’s most important markets for passenger travel demand and profitability, with the Dubai to London Heathrow route accounting for the highest share of departing seats in 2019.
“We are already seeing a noticeable increase in booking speed in our systems for people leaving the UK in Dubai after December 2 after the lockdown ended,” Clark said.
“I remain optimistic that more corridors will open as we have this under control,” he added. “It just takes a little longer than everyone thought and it’s not without its difficulties.”
Clark said travel to 104 cities has been resumed and 151 of his Boeing 777s were operating and carrying passengers across the network at various capacities. Emirates still has approximately 150 A380s on the ground.
Improvement of macro conditions
Clark was more optimistic about the regional and global economic outlook, but said the recovery won’t come immediately. “I think the global economy will take time to get out of this particular state,” he said.
Oil prices are also expected to remain low, with oversupply and weak demand helping to cut costs for major carriers like Emirates.
“As long as it is erratic and the oil supply continues to be robust, the price is likely to be between $ 40 and $ 50 over the course of 2021,” he said. “This offers us an interaction price and allows us to operate profitably in both a P&L situation and from a liquidity standpoint.”