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Fri 12 Mar 2010 08:21 AM

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Emirates to meet full year profit target - CEO

Dubai carrier sees no problems funding its plane purchases this year.

Emirates to meet full year profit target - CEO
HIGH FLYING: Middle Eastern airlines saw the highest global growth rate of 11.2 percent in air passenger traffic for 2009. (Reuters)

Emirates airline, owned by the government of Dubai, is set to meet its full-year profit goal of AED2bn, and expects no problems funding its plane purchases this year.

"We've had a very good year," Chief Executive Tim Clark told Reuters in an interview at the world's biggest travel fair, ITB Berlin. Its fiscal year ends on March 31.

Middle Eastern airlines saw the highest global growth rate of 11.2 percent in air passenger traffic for 2009, and their peers in other parts of the world are expected to post total 2010 losses of $2.8 billion, according to industry body International Air Transport Association (IATA).

German flagship carrier Lufthansa earlier said it expects a tangible improvement in demand for long-haul flights later this year, though the market could be distorted by "massive" capacity growth at some airlines, such as some Gulf carriers.

Clark confirmed that Emirates, the largest customer for the Airbus A380 superjumbo, would have no problem financing the 11 aircraft it is set to receive this year as it presses ahead with expansion.

He also said it would not be much longer until the company decides on how many more planes to order, having said in November it was in talks with Boeing and Airbus to buy "tens of planes".

"The decision will be made when we're ready. It's not long," Clark said. Emirates has grown to be the world's fourth-largest airline by scheduled passenger-kilometres flown internationally.

Clark echoed Lufthansa Chief Executive Wolfgang Mayrhuber in saying that the aviation industry's recovery partially depended on the development of oil prices.

"If oil goes back above $100, we'll be in trouble," Clark said.

Middle Eastern governments have been developing their flagship carriers over the past couple of decades to help diversify their economies and reduce dependence on oil revenues.

These airlines are increasingly redirecting passenger flows from Europe, Asia and the Americas through their hubs, making them serious competitors for established airlines such as British Airways or Cathay Pacific.

In Germany, Emirates has been fighting for market share and has been forced by the government to raise business class prices on some routes on which it competes with European Union-based carriers including Lufthansa.

"We complied, but we are challenging it," Emirates' senior vice president Andrew Parker told Reuters.

The German government had told Emirates last year that it was illegal for non-EU airlines such as Emirates to undercut the prices of other carriers on routes from Germany to non-EU destinations.

Emirates has taken the matter to the European Commission, Parker said. He said he could not say when the Commission would decide whether Germany's demand is lawful.

The Gulf airline is also still trying to expand its business in Germany by gaining permission to fly from Stuttgart and Berlin airports. It has been in talks about the issue with Germany's new administration under Chancellor Angela Merkel.

"We're very confident that we will persevere," Parker said. (Reuters)

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