Market Overview

World Biggest Airline Emirates 'Suspends' Passenger Operations To Most Countries Due To Coronavirus

World Biggest Airline Emirates 'Suspends' Passenger Operations To Most Countries Due To Coronavirus

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After announcing it would temporarily suspend most passenger flights starting Wednesday, Emirates reversed course and said it would keep on flying to a number of countries, including the United States.

What Happened

Emirates Airlines, a flag carrier of the United Arab Emirates, said it was suspending most passenger flights due to the COVID-19 pandemic, following a UAE government directive. The airline tweeted, “Today we made the decision to temporarily suspend most passenger flights by 25 March 2020. SkyCargo operations will continue. This painful but pragmatic move will help Emirates Group preserve business viability and secure jobs worldwide, avoiding cuts. The airline reversed course and sent out another tweet saying that because it had received requests from governments and customers, it would continue passenger operations and cargo to few countries "as long as borders remain open, and there is demand."

Passengers issued tickets on or before March 31, who are impacted due to a travel ban, quarantine requirements, travel advisory, mandatory lockdown or flight cancelation are eligible to rebook or receive travel vouchers. Rebooking will be permitted without charge based on applicable fare difference, if any. Travel vouchers will be valid for 12 months from the date of issue.

The Chairman of Emirates Group HH Sheikh Ahmed bin Saeed Al Maktoum said, “The world has literally gone into quarantine due to the COVID-19 outbreak. This is an unprecedented crisis situation in terms of breadth and scale: geographically, as well as from a health, social, and economic standpoint.”

Why It Matters

Emirates Group is taking measures to reduce costs like postponing or canceling discretionary expenditure, freezing non-essential recruitment and consultancy work, working with its suppliers to find cost savings and efficiency, encouraging employees to take paid or unpaid leave and temporarily reducing basic salary 25%-50% for the majority of Emirates group employees for three months.
Junior employees will be exempt from salary cuts, while the Presidents of Emirates and dnata, an Emirati airport services provider owned by the Emirates Group, Sir Tom Clark and Gary Chapman, will take a 100% cut in basic salary for three months.

Underscoring the financial viability of Emirates the chairman remarked, “Emirates Group has a strong balance sheet, and substantial cash liquidity, and we can, and will, with appropriate and timely action, survive through a prolonged period of reduced flight schedules, so that we are adequately prepared for the return to normality.”

What Else

Airlines are struggling to cope during the current COVID-19 pandemic, and some, such as American Airlines Group Inc. (NASDAQ: AAL), are using their passenger planes to fly cargo to remain viable. 

Airlines in the U.S. are seeking $58 billion in bailouts, but opposition to such a handout is increasing.


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