Emirates Profit Rebound Threatened by Summer Pilot Shortage

(Bloomberg) -- Emirates, the world’s biggest long-haul airline, said a rebound in earnings over the past year faces a challenge this summer as a pilot shortage forces the Dubai-based carrier to trim frequencies.

Sales that stumbled after the low oil price clipped travel in Persian Gulf economies continued to pick up in the second half through March 31, President Tim Clark said Wednesday in Hamburg. U.S. demand has also rebounded from restrictions imposed early in Donald Trump’s presidency.

The revival will come under pressure as a shortfall of 100 to 150 pilots compels Emirates to pare frequencies to destinations including Fort Lauderdale and Miami during the looming high season for global travel. Cuts will also extend to several European and Asian routes, according to reports in the Gulf.

“We’re a tad short in pilots,” Clark said, adding that the service reductions will be short term and that crew numbers should be “alright by September or October.” Factors including economic growth in the U.S. and U.K. and high employment and rising wages in Germany continue to favor growth, he said.

While the rising oil price is boosting Gulf economies and hence local demand for travel, a 25 percent gain over the past year presents a “challenge” for Emirates, which does not hedge, according to Clark. Prices are likely to ease though, given the supply coming into the market and barring a major geopolitical upset, he added.

Etihad, FlyDubai Links

Emirates is cooperating more closely than before with neighbor Etihad Airways PJSC as the Abu Dhabi carrier formulates a strategy review that may see it shrink operations following a loss of close to $2 billion in 2016. The companies are “looking at all sorts of areas,” with “work going on behind the scenes,” though antitrust rules mean they can only do so much, Clark said.

The executive has said previously that a merger between the companies is unlikely, though a decision would ultimately rest with the rulers of Dubai and Abu Dhabi. A new partnership between Emirates and low-cost sister company FlyDubai has been “energizing” and is producing “very good flows” between the airlines, he said.

Clark was in Hamburg to promote the carrier’s new first class product on a Boeing Co. 777 at the annual Aircraft Interiors Expo, with the cabins also set to feature on new 787 Dreamliners. The executive also said:

• Emirates is continuing to weigh a basic economy offering that would include hand luggage, food and inflight entertainment only
• Introduction of premium-economy class still 18 months off; new cabin could also be retrofitted into some jets
• Carrier is in “substantive discussions’’ with U.S. to advance “open skies’’ plans, including so-called fifth-freedom rights
• Bookings for new London Stansted route are looking very good
• A380 superjumbo set to operate a daily Hamburg service
• Options to buy more A380s to be exercised “rather sooner than later,’’ though no decision yet reached on engine choice for latest batch
• Cargo operations are currently “booming”
• Company weighing how best to respond if missiles fired into Syria

To contact the reporter on this story: Richard Weiss in Hamburg at rweiss5@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, Christopher Jasper, Claudia Maedler

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