The Emirates group has announced a cost-reduction plan, as the outlook for travel demand remains weak due to the coronavirus (COVID-19) pandemic.
Emirates chairman and chief executive, HH Sheikh Ahmed bin Saeed Al Maktoum, explained: “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.”
The group’s cost-saving plan includes: postponing or cancelling discretionary expenditure; a freeze on all non-essential recruitment and consultancy work; working with suppliers to find cost savings and efficiency; encouraging employees to take paid or unpaid leave in light of reduced flying capacity; a temporary reduction of basic salary for the majority of Emirates Group employees for three months, ranging from 25% to 50% (junior level employees exempt from this); and the presidents of Emirates and dnata, Sir Tim Clark and Gary Chapman, will take a 100% basic salary cut for three months.
On the decision to reduce basic salary, Sheikh Ahmed explained: “Rather than ask employees to leave the business, we chose to implement a temporary basic salary cut as we want to protect our workforce and keep our talented and skilled people, as much as possible. We want to avoid cutting jobs. When demand picks up again, we also want to be able to quickly ramp up and resume services for our customers.”
Emirates also stated that it is monitoring the current situation and that it keeps in regular contact with relevant authorities so that it can implement the latest guidance to its customers and staff safe and healthy.
The group has provided its frontline employees, such as crew and airport teams, with support to stay safe while on duty, including hand sanitizers and masks where required.
Sheikh Ahmed said: “These are unprecedented times for the airline and travel industry, but we will get through it. Our business is taking a hit, but what matters in the long run is that we do the right thing for our customers, our employees, and the communities we serve. With the support and unity that we have seen from our employees, partners, customers, and other stakeholders, I’m confident that Emirates can tackle this challenge and come out stronger.”
Virgin Atlantic implemented a “drastic” cost-cutting exercise to offset a slump in demand as a result of the coronavirus outbreak.