Oil price ‘may bring us all to our knees’, says Emirates president

Emirates Airline, the Arab world’s largest carrier, will not push for fuel subsidies despite rising oil prices that “threaten to bring us all to our knees”, the carrier’s president said Monday.

Tim Clark said Emirates had faced a “tough” year amid high fuel costs, the impact of bad weather in Europe and the US and last year's Icelandic volcano eruption.

“You cannot sustain. I do not believe the economy can sustain that price for too long as it will bring us all to our knees, not just the aviation industry but everything else,” he said on the sidelines of a travel event in Dubai.

Brent crude hit a 32-month high in March, reaching more than $127 a barrel. Fuel accounts for 43 percent of Emirates’ costs but the airline would not be asking for state support, Clark said.

“No, none whatsoever... Don’t even talk to me about subsidies or asking people for help. We do it ourselves,” he told reporters.

The Dubai government-owned carrier in April said it would add fuel surcharges on some routes, adding up to AED520 to single air fares in first and business class.

Clark said the airline would continue to review “the propensity” in the market for further surcharge increases if oil prices settle above $130 a barrel and warned smaller airlines in the region could be squeezed out.

“If oil stays where it is then there are going to be some casualties. Nothing can be sustained at this level so something has to be done,” he said. “If by the end of the year we still have $130, $140 or $150 then watch this space.”

Emirates expects to spend about $10bn a year to fund its fleet expansion, under a plan that will see the airline receive about 30 aircraft a year until 2014.

The carrier dropped plans for a bond to finance expansion after political unrest in the Middle East made rates more expensive, but Clark said he hadn’t ruled out tapping debt markets.

“Banks are a little more flush now… So maybe there is an inclination to lend at rates or create bonds at rates that are more attractive to us,” he said.

Emirates will announce its results for the second half of 2010 on May 10. Despite a “tough” year, Clark said the airline had managed to stay “on course”.