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Emirates raise debt as they brace for the hardest months ever

Image:-Emirates Airline

Emirates, one of the largest long distance airlines in the world, said on Sunday they are going to raise debt to help with the coronavirus pandemic and can be forced to take tough steps as they face the hardest months in their history.

The state-owned airline, which in March stopped regular passenger flights because of the outbreak of the virus which shattered the global demand for travel said that it had recovered at least eighteen months.

It reported 21% more profit for its financial year ended March 31 but stated that its fourth-quarter performance had hit the pandemic and would tap banks to raise debt in the first quarter to reduce the impact of the virus on cash flows.

The airline promised financial support from its owner of the State of Dubai, did not tell how much it expected to increase.

"Our performance in 2020-21 will be significantly affected by the COVID-19 pandemic, President Sheik Ahmed bin Saeed said in a statement.

Sheik Ahmed said in an intern email sent to his staff on Sunday. that the months ahead are the most difficult in the 35-year history of the airline. "We continue to take aggressive cost management measures and other necessary steps to safeguard our company while planning for re-start.

"We're going to need to take harder measures if our business the situation isn't improving at some point," he said in the email.

Emirates didn't respond immediately to an e-mail request for an internal e-mail comment.

Emirates Group, which includes the airline among its assets, has stated that its shareholder, the state funds of Dubai, will not pay an annual dividend. Its cash assets were $7 billion (25.6 billion dirhams), he said.

Dubai Ruler Sheik Mohammed bin Rashid al-Maktoum said he confident the Emirates will emerge from the crisis stronger and is a global leader in aviation in the Group's annual report released on Sunday. There was no obvious mention of State aid promised by the Crown Prince of Dubai.

The airline has claimed that it made 1,1 billion dirhams from 871 million dirhams a year earlier in the year to March 31. It warned however that the outbreak of the virus had reached its final quarter.

Revenue contracted by 6.1% to 92 billion dirhams, while passenger numbers dropped by 4.2% to 56.2 million.

Emirates also temporarily cut employees' pay in March due to the coronavirus pandemic.

When Emirates resume normal flights, it is not clear. From this month, Rival Qatar Airways said that they would rebuild their networks while Etihad Airways in Abu Dhabi plans to resume regular flights in June.

International connectivity is crucial for the model of the Emirates Gulf hub, where Dubai became the busiest international airport in the world six years ago. They don't operate domestic flights and most of their passengers pass through their hub.

Emirates' sister company dnata has seen a 57 percent decline in revenues in its catering and airport services businesses by March 31 to 618 million dirhams, which the company has attributed to investments in its travel businesses.

Sheik Ahmed said in an internal email that Dnata has put some employees off to qualify for the unemployment scheme.

Dnata reviews its operations in Australia once it was excluded due to its foreign ownership from the government's employment protection scheme.

The income of the Emirates Group, including dnata decreased by 28% to 1.7 billion dirhams. Revenue fell by 4.8% to 104 billion.

It was said that the Group cost the unfavorable exchange rates 1 billion dirhams of profit while seeing some relief from cheaper oil prices.

($1 = UAE Dirham 3,6730)

Article Edited by | John Heine |

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