SYDNEY--International airlines face a "perfect storm" from high
fuel costs, a slowing global economy and volatile exchange rates
that could see many carriers forced to downsize, Tim Clark, the
President of Dubai's Emirates Airline said in an interview
Tuesday.
"It's a perfect storm of adversity now facing airlines," said
Mr. Clark. "The euro is going south, the pound is going south, fuel
costs are still too high."
Mr. Clark, a key and long-serving executive at Emirates, said he
wasn't surprised that Qantas Airways (QAN.AU) on Tuesday announced
a sharp drop in profits and cautioned that many international
carriers could be forced to retrench due to the difficult trading
conditions. He also dismissed reports last month that the
Dubai-based airline was interested in taking a stake in Qantas,
after Abu Dhabi-owned Etihad Airways said Tuesday that it acquired
a 4% stake in Virgin Australia.
"We're not up for buying a stake in Qantas," said Mr. Clark.
Like Qantas, Emirates has struggled amid tougher trading
conditions and higher costs especially for fuel. Last month, the
airline said net profit fell 72% for its latest fiscal year after
taking a US$1.6 billion hit from high fuel costs.
Mr. Clark said that debt markets had become tougher for all
airlines and that Emirates isn't sure that it needs refinance a
US$550 million Islamic bond that matures this month.
"U.S. capital markets are still open," said Mr. Clark.
Write to Andrew Critchlow at andrew.critchlow@wsj.com