Unrest in the Middle East and northern Africa could hit
revenue at Emirates by 3-5 percent and Japan’s nuclear crisis will slam the air
travel market there, the head of Dubai-based airline said.
But unlisted Emirates, one of the Arab world’s biggest
carriers and a sector bellwether, has been able to shift capacity away from the
turmoil sweeping the region and expects business in Japan to roar back,
President Tim Clark said.
As tumult grew when pro-democracy protests swelled, Emirates
halted service to Libya and cut back flights to Tunis and Egypt.
“In the early stages it was taking us down 5 or 7
percentage points for seat factor,” he said. “When we realised it
wasn’t a flash in the pan – that it was going to stay with us – we obviously
had to stop flying to Libya, we reduced Tunis, we reduced Cairo. We brought
Cairo back in again, by the way.”
Asked what the sales impact would be, he said:
“Surprisingly not as bad as we would have thought. If
it continues we may be down 3 to 5 percent in income, if that. If we had left
it as it was, it could have been 3 to 5 percent, but as we retuned the capacity
… we restored that, so we are now back up to high 70s, low 80s seat factor
and of course in April as we go though the Easter period we are completely sold
out.”
Airline industry data show at least 100,000 fewer seats a
week flying to or from Egypt and Tunisia.
In Japan, where a huge earthquake and tsunami killed tens of
thousands and crippled a nuclear power plant that has been leaking radiation,
the market could fall 40 percent.
“This has been a profound shock to everybody in Japan.
I’m not sure whether they have got the appetite to go overseas and trade or go
as tourists. I don’t think outbound Japan is going to be very strong,” he
said in an interview on Wednesday embargoed for release on Thursday.
“I think the Americans will avoid Japan for quite a
long time simply because of the Chernobyl effect and the perception issues. I
think that market could be 20, 30, 40 percent down, if the truth be known. I
would say until the end of this year it’s not looking good.”
“Surprisingly [Japanese airport] Narita was at 75
percent seat factor last week for us. You’ve got lots of people going out, not
so many people going in, but there is still travel going on. We’ll stay there
as long as it safe to do so.”
He expected a huge influx when reconstruction work starts.
Uncertain business conditions had not affected Emirates’
financing or fleet expansion plans, Clark said, adding it had funding in place
for all the Airbus A380 superjumbo jets it will have delivered until March
2012.
Emirates will eventually get 90 A380s and would order more
if it had room for them all. “I’d like 120 but we can’t fit them in,
unfortunately,” he said.
It would continue to tap financial markets for funding.
“Even when the world’s banking system was under huge
threat in 2009 and 2010 we had no problem in financing our aircraft because we
are considered gilt and that is without government guarantees…,” he
said.
“It is simply based on the fact that we have $4bn on
our balance sheet, we have a very strong record of profitability, we have a
good business model. The bankers are very relaxed about debt provision for what
we do.”
Clark was in Vienna – home of rival Lufthansa’s Austrian
Airline – to try to seal a deal on flight numbers beyond October. Signing fair
competition clauses remained open.
“I’m hoping that sense will prevail and that we will be
able to demonstrate – at least to the Austrian government – that we are not
here on a freebie. We don’t get free oil or free money or whatever it is they
say and that we are quite happy to sign up to this. If that is the case maybe
it will all go away.”
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