Emirates Could Tap Dubai for Support Amid Delayed Recovery
Emirates said it may need to tap Dubai’s government for an equity injection if demand doesn’t rebound from the coronavirus crisis in the next six to eight months.
Should traffic remain subdued “we will make the recommendations to the government as where to go with regards to raising more cash,” Tim Clark, the carrier’s president, said in a World Aviation Festival webinar Wednesday.
He said other options for state-owned Emirates, which got $2 billion from Dubai last year, include taking on more debt.
Clark said he’s still hopeful that demand will revive in time for the peak summer season as vaccination rollouts continue in the U.S. and Europe and extend to the developing world, though his expectations of an upturn by April or May have already been dashed.
Emirates has been hit especially hard by the pandemic, with widespread border curbs making it impossible for people to make the inter-continental journeys in which it specializes. The Gulf carrier has responded by grounding a fleet of Airbus SE A380 superjumbos, while its Boeing Co. 777s are struggling with lower passenger loads and mainly transporting cargo.
Clark said Emirates is seriously considering converting some older 777-300ERs into freighters, having temporarily adapted 10 planes and modified some of its A380s to carry more tonnage amid soaring cargo demand during the pandemic.
Emirates needs to have “a grown up conservation” with Boeing over the new 777X passenger plane for which it’s the biggest customer, the CEO said, reiterating that contract specifications must be met amid concerns over the model’s performance and deliveries that have slipped to 2023 or 2024.
Those issues mean the airline hasn’t been able to decide on the final fleet mix of 777s and smaller 787s, the executive said, adding that the A380s will also be returned to service and that some will operate into the 2030s.
Bloomberg reported in February that Emirates could swap as many as a third of its 115 commitments for the 777-9 to the Dreamliner, exacerbating uncertainty surrounding the bigger jet’s future as program delays give customers the right to walk away from orders.
Emirates and short-haul sister company Flydubai plan to expand their partnership and turn Dubai into an even bigger connecting hub, Clark said, adding that the value of having the “two airlines joined at the hip” makes more sense now than it has in the past.
The carriers, which have deepened ties since 2017, will keep their brands separate while further integrating their fleets and networks and rationalizing routes, he said.
Clark, 70, said he hasn’t set a retirement date having already delayed his exit from June 2020 to help guide Emirates through the Covid-19 crisis. He said his successor will need to work well alongside Flydubai’s chief and also understand Emirates’s business, so that an internal candidate might be more appropriate.
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