Coronavirus and travel: Emirates - world's largest long-haul airline - suspends almost all flights

Emirates, the world's largest long-haul airline, will suspend nearly all of its passenger operations this week, in the latest concession to the coronavirus pandemic that has devastated global travel.

Flights to most destinations will cease from March 25, Emirates said Sunday in an email. Cargo service will remain in operation, as will routes to 13 countries including the US, UK, Switzerland and Singapore in response to requests from governments and customers to support repatriation, the company said.

"We cannot viably operate passenger services until countries re-open their borders, and travel confidence returns," Chairman and Chief Executive Officer Ahmed bin Saeed Al Maktoum said in a memo to employees seen by Bloomberg. "Some of our competitors, or even our supply chain partners, may not survive this crisis."

With its fleet of all wide-body aircraft, the state-owned airline has turned Dubai into a hub for global travel, typically operating more than 500 flights a day. That mission, which has fed the city's growth since Emirates was founded in the mid-1980s, is now under assault by the coronavirus pandemic.

Shutting Down

Countries are closing off access to protect their populace, dealing a body blow to the global airline industry. Carriers that were in relatively good health at the start of the year have had to ground fleets, lay off staff and request government aid for survival.

Major US carriers like Delta and American Airlines are waiting on lawmakers to clear a bailout package, while in the London, where Heathrow airport the busiest hub in Europe, the government is considering moves to support the industry that include loans and potentially equity.

Similar scenarios are playing out in Germany, France and Scandinavia, while China has already nationalised the parent of Hainan Airlines, as is Italy with bankrupt flag-carrier Alitalia.

Long-Distance Hub

The Emirates business model is built around a fleet of Airbus and Boeing long-distance aircraft carrying passengers between all corners of the globe, and while the spread of the virus is easing in parts of Asia, it's accelerating in Europe and North America.

The airline was just emerging from another crisis, completing a strategy rethink late last year after persistent low oil prices weighed on regional economic growth.

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Emirates dropped the Airbus A380 from its long-term plans, ordered smaller wide-body aircraft and reviewed its route network, while increasing cooperation with regional discount carrier Flydubai - also state-owned.

Now a recovery in oil prices has been reversed by the outbreak, with a price war between Saudi Arabia and Russia exacerbating the economic hit on the Gulf.

"Until January 2020, the Emirates Group was doing well against our current financial year targets," Sheikh Ahmed said. "But COVID-19 has brought all that to a sudden and painful halt over the past six weeks."

The airline's base at Dubai International Airport, the world's busiest airport in terms of international passengers, has followed other jurisdictions in banning tourists and residence visa holders from entering the country.

Emirates plans to ground 230 planes, or 85 per cent of its fleet, Chief Operating Officer Adel Al Redha told Alarabiya News Channel on Sunday.

The Gulf carrier was considering idling the bulk of its 115 Airbus A380 super-jumbo aircraft, and plans to delay the handovers of the final handful of planes that are due, Bloomberg News has reported. The airline also operates 155 Boeing 777 jets.

Salary Cuts

The outlook for travel demand remains weak across markets in the short to medium term, Emirates said, adding that it will take the following measures:

  • A temporary reduction of basic salary for the majority of Emirates Group employees for three months, ranging from 25 per cent to 50 per cent.
  • Employees will continue to be paid their other allowances during this time. Junior level employees will be exempt from basic salary reduction.
  • Emirates President Tim Clark and Dnata President Gary Chapman will take a 100 per cent basic salary cut for three months.

Cabin service attendants's basic salaries or fixed allowances will not be reduced, according to the memo.

"If any employee had volunteered previously for unpaid leave, they can now opt to cancel that leave in lieu of the above," Sheikh Ahmed said.

Flydubai, which has an extensive partnership with Emirates, cancelled more than 85% of its flights.

BLOOMBERG

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