Emirates Sees Lower Oil Industry Demand

March 10, 2016

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Emirates will show "significantly higher" 2015/16 annual profits, but some business has evaporated due to the recent slump in oil prices, its president Tim Clark said.

The Dubai carrier is considering downgrading A380 services to Houston because of falling demand from the oil industry, which overall represents its biggest corporate customer, Clark told reporters during the ITB tourism exhibition in Berlin.

"On the one hand you save on the operating costs, but your yield starts to fall because your corporate business is disappearing so it’s a double-edged sword," Clark said.

"On balance, the airline community is doing better as a result of the lower oil price."

The remarks echo cautionary comments by the head of Qatar Airways, who said on Wednesday that premium-cabin yields were falling because of reduced spending by oil-producing countries and weaker business sentiment.

Clark said Emirates is still interested in an upgraded version of the A380, a project shelved for the time being by Airbus as it focuses on a possible bigger version of the A350.

Clark questioned Airbus's proposal to add to the A350 family and contrasted the clarity of its wide-body decisions unfavourably with that of Boeing.

"There seems to be a certain amount of cloudiness down there. One minute they are quite keen - I don't know if they can afford to do the A380neo and the (new) A350," he said. "Airbus have got to rationalise a few things."

In 2014, Emirates cancelled an order for 70 A350s.

It is now in the advanced stage of once again evaluating the A350-900 against Boeing's 787-9 and 787-10, Clark said, but he declined to say when the mid-sized jet contest would be settled.

(Reuters)