Emirates grounds 20 planes; facing ‘double whammy’ – Tim Clark

The airline has been hit by rising oil prices and the strengthening dollar



Dubai airline Emirates has grounded 20 aircraft due to sluggish demand in May, particularly during Ramadan, airline president Tim Clark confirmed on Monday.

The jets that have been grounded include Airbus A380s and Boeing 777s, Clark told reporters in Sydney. The aircraft are currently parked at the Al Maktoum International Airport.

“On top of Ramadan we have May, so demand for travel is down significantly in the Muslim world,” he said, speaking on the sidelines of the International Air Transport Association (IATA) annual meeting. Traffic in May fell by 50 per cent compared to the previous month.

“It’s not exactly easy” doing business during this time, Clark added.

The grounded aircraft are expected to return to service following the Eid al Fitr holiday in mid-June, with the fleet returning to maximum capacity by September or October.

Also read: Dubai’s Emirates eyes 2020 premium economy launch

Emirates, the world’s biggest airline by international travellers, is also facing a “double whammy” of rising oil prices and the strengthening dollar – to which the UAE dirham is pegged, said Clark.

“We have a double whammy at the moment; strengthening dollar, strengthening fuel prices. Naturally, that is going to take a mathematical hit on the yields that we get out of our markets that are non-dollar denominated at the same time that we have fuel prices rising,” he said.

“Volatility rules. Who would have thought the dollar would be up where it is today at the time when fuel is up. Normally, they are in inverse relationship; as the dollar strengthens, fuel comes off, but this time, it’s twice [both], so it’s a new one.”

IATA downgraded its profit forecast for the aviation industry on Monday, citing higher oil and labour costs, but also said yields were expected to rise 3.2 per cent this year.

The international body cautioned that rising fares could hit demand growth.

However Clark said that they were still seeing rising demand despite higher ticket rates.

“We have very strong summer bookings at higher prices,” he said, adding that the airline was on the lookout for any signs that higher ticket prices were hurting demand.

Emirates recently reported a 124 per cent surge in profit for its 2017-2018 fiscal year as a sign of improving market conditions. Clark indicated demand for the carrier’s more expensive first and business class options “remains strong in the Middle East”.

Read: Dubai’s Emirates reports 124% surge in profit