Emirates’ CEO Says Strong Dollar ‘Erodes’ Profit, Asks Big 3 to ‘Step Up’
Joe Cortez January 15, 2016
Emirates Airlines President Tim Clark gives a speech during a news conference at Sydney airport March 31, 2013. A flyover by a Qantas Airways and an Emirates Airlines Airbus A380 took place on Sunday as part of a promotion to mark the commencement of the five-year alliance between struggling national flag carrier Qantas Airways Ltd and Emirates Airline, and was being promoted as the first time that two commercial airline A380 planes have flown in formation. Australia's competition regulator granted conditional final approval on March 27 for the alliance, just days before the first Qantas flight is due to transit through Dubai. REUTERS/Daniel Munoz (AUSTRALIA - Tags: TRANSPORT BUSINESS) - RTXY3LZ
Emirates’ CEO faces new challenges despite growth, including a strengthening dollar and the Open Skies situation.
Despite Emirates’ aggressive growth, the airline’s chief executive claims he has a new problem in the United States: a strengthening dollar. In an editorial written for Arabian Business, Emirates’ CEO Tim Clark claims a stronger dollar ultimately cuts into his airline’s bottom line.
“The strength of the U.S. dollar against major global currencies continues to erode our profits,” Clark wrote. “Reflecting the sluggish global economic environment, air cargo traffic continues to flatline.”
Clark used his pen time to not only express concerns about the growing dollar but to decry the American legacy carriers in their Open Skies challenge. Once again, Clark defended his airline with claims they have never received subsidies from the United Arab Emirates and challenged his opponents to compete alongside his airline.
“When carriers like Emirates are executing a well-documented, highly visible, transparent business plan to the world and taking advantage of the U.S. Open Skies treaties, you can’t suddenly change the rules and lobby the government for protection,” Clark wrote. “We ask the Big 3 to step up and start competing on the fundamentals – product and service.”
America is not the only problem the growing Arabian carrier is facing. Clark went on to claim the Emirates hub at Dubai International Airport (DXB) is experiencing gridlock from expanded service, while lower fuel costs are a “double-edged sword.” Clark writes his airline is working with local authorities to deliver solutions by 2019 while continuing to invest in fuel-efficient aircraft and new technologies to better respond to oil pricing and provide long-term growth.
Despite the challenges, Clark remains optimistic about his airline’s future. The executive writes his airline maintains their flexibility, in order to weather the challenges that face the business in 2016.
“Emirates’ strategy remains unchanged – we will focus on our own organic growth, connect city pairs that make sense for tourism and business,” Clark wrote. “While offering an outstanding value proposition for our customers.”
According to Arabian Business, Emirates reported their half-year revenue at $12.9 billion, down 2.3 percent on the year. Meanwhile, the airline’s profit increased by 65 percent to $1 billion.
[Photo: Reuters/Daniel Munoz]
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There is a lot of crazy stuff in the Middle East. Emirates is related to the DXB and DWC airports, funded by the government, owns Dnata (ground service), and has ties with a whole bunch of shady stuff. And is presumably - but not truthfully - run by British expats. There is more to this story.
When the head of Emirates complains about competition, I can only hope he gets to experience it an an even greater intensity!
How the heck can low fuel costs be anything but beneficial to an airline? Fuel's your #1 expenditure; if it's cheaper, all else being equal, you make more money. Unless, of course, you have an alternate revenue source which is hurt more badly by low fuel costs than your main revenue stream is helped by it. Hm.