Dubai Promises A Bailout For Emirates

Long-haul legend Emirates is likely to receive a bailout from the United Arab Emirates (UAE) government. Dubai’s Crown Prince Sheikh Hamdan bin Mohammed has stated on Twitter today that the government is planning to inject equity into the carrier to see it through the current coronavirus pandemic. However, the size, shape and form of that bailout remains to be disclosed.

Emirates A380
Emirates will be getting a helping hand from the UAE. Photo: Getty

An injection of equity

Dubai’s long-haul airline Emirates is getting a helping hand from the government amid the tribulations of the COVID-19 pandemic. The UAE government announced today that it will inject equity into the airline to see it through the crisis.

Gulf News reports that Dubai’s Crown Prince Sheikh Hamdan bin Mohammed has stated that the government is fully behind the carrier and that it will support it with a cash injection to keep the business afloat. The statement issued, as presented by Gulf News, reads,

“As a shareholder of Emirates airlines, the Government will inject equity considering its strategic importance to the Dubai and UAE economy and the airline’s key role in positioning Dubai as a major international aviation hub.”

The announcement didn’t specify how much capital would be bestowed upon the airline, but said that further details would be announced down the line.

The UAE government joins a number of others in offering state aid to airlines, a move certainly made to protect the economy and ensure a swift recovery once the danger has passed.

A lifeline to the grounded carrier

Emirates has been completely grounded for over a week now, since the UAE put measures in place to ban all passenger flights in the region.  Prior to this, Emirates had cut back on international flying, and had even moved to cancel most passenger operations, but had come under pressure to keep services moving for the good of passengers and the economy.

However, since March 24th, no Emirates scheduled services have operated. It’s possible the carrier has flown, but only cargo or repatriation flights. As such, it is still paying out all its fixed costs with only a limited means of making any revenue.

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Emirates and Etihad have been forced to ground flights. Photo: Getty Images

The airline has been looking for ways to reduce outgoings, including reducing staff salaries by between 25 and 50% for the next three months. Tim Clark, the outgoing president of the airline, has taken a 100% cut of his basic salary for the same time period.

As a group, Emirates employs more than 100,000 people. This includes 21,000 cabin crew and some 4,000 pilots. As an airline, it is absolutely crucial to the economy of the UAE, having been almost single-handedly responsible for turning Dubai from a dusty desert town into the thriving global city we see today.

As such, it’s no big surprise that the airline is getting a bailout. However, what will be interesting will be to see what shape that bailout takes. As with most Gulf airlines, Emirates is entirely owned by the UAE government, so is in a unique position compared to the other airlines that are crying out for help.

What do you make of the proposed bailout of Emirates? Let us know in the comments.