In part two of an exclusive interview with Airlineratings.com in Dubai, Emirates President and CEO Sir Tim Clark talks about the expected passenger demand and challenges for his successor as well as his own role in the future.
Airlineratings: Where does Emirates’ fleet operations stand today?
Tim Clark: We have all Boeing 777s flying, some as freighters or combi freighters. We have 62 A380s flying out of 118 total, so there were 56 aircraft still on the ground, while five A380s have been permanently retired and some dismantled.
One of the problems we have with the A380 is the gear coming up for replacement or overhaul, which was supposed to happen every ten years and we extended that to twelve years with the regulator. Each set of gear is worth US$20 million. So we said let’s take the old ones off, use them as a temporary gap while those are overhauled. We also recycle other usable parts from retired A380s, even seats. But cutting up the A380 fleet stops there, after these five are retired, all the other aircraft remain. In fact, where we started to drop some, I just decided to bring them back into the program.
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Which markets are still severely restricted in how Emirates can serve them, is China the biggest missing piece?
Flying to China, we had 35 A380 services a week before the pandemic. They just banned us for another two or three weeks because we had two people on board testing positive. And Hong Kong is dead because of the greater scheme of things. Hong Kong is Chinese territory and what they do with it is their affair. Hong Kong will never re-emerge the way it was. So we have 62 A380s flying. And we had 84 frequencies a week into Australia, many of those were A380s, and New Zealand, with five aircraft alone being allocated for Sydney flights now, four for Melbourne. Auckland needs three aircraft for one frequency. They gobble up all of this. In Bangkok, we were up to seven or eight A380s a day, while there are now only two to three. But although Bangkok is open, Koh Samui is not and Phuket has restrictions, we are facing all of this all the time. When all is said and done, we will put all the A380s back in. If China wants to play China, we won’t put the A380 into Hong Kong and the points in China. So eight A380s would not be called up. We expect that by July, demand will surpass 2019 levels, demand is there.
Where do you see the industry go from there?
You have had two years of going nowhere now travel coming back at you. Let’s assume we recapture the 2019/2020 growth curve. Now subtract from that the capacity that’s going to be available. Hong Kong no longer a hub? All the people that used to go UK-Hong Kong-Australia-Oceania – can’t do anymore. I’m really sorry that Cathay Pacific is in this terrible state, I flew them as a kid. They were one of the definers of the medium long-haul networks that so influenced what we did. To see them getting through all of this is terrible, really awful. After demand was suppressed for two years, its bounce back will lead to a huge peak in demand. It always happened, in 1998, after 9/11 and the financial crisis. But then, there was still capacity around, you didn’t ground fleets for two years, so then they could accommodate it and grow. Now there are too many casualties, the barriers to entry are too high. Flying will become more expensive I’m afraid, you do the maths, it’s simple supply and demand. It will happen this summer.
What will be the main challenges to your successor?
All the people here know how I did it, how I moved the business along, it might not have been perfect. All I want to say to them: You can’t afford to lose your way, you can’t afford to be timid, you got to get the job done because you are in it for the long term. We have created the largest international airline, ever. If you lose focus, and you don’t have a pathway forward, with all this coming at you, bear in mind that we are not a Ryanair that has just domestic and European reach. We trade on every continent on the planet, and every one of them has its own pressures, which affect us. You got to be able to deal with those to keep the production going. Your brand is going to be as good or even better as it ever was, your product is going to be one that everybody in the business aspires to, wants to copy and paste, you got to deliver to what you say, you got to have the latest technologies.
How can that be achieved?
To do that you need strong, focused leadership, you cannot afford to wonder ‘oh what’s happening, because that is what I see all around me. Worried people, losing the plot. I don’t blame them. The successor has got to keep true to what we did. Because it worked and it was hugely successful. It’s not broken, you don’t have to fix it, do more of the same. And at times, they say it’s lonely at the top, at times when you have no advice other than your own counsel because people don’t know, then you must follow your instinct and do the right thing. That way you’ll be alright.
According to your own logic, you would retire soon now, as you say the worst is over by summer…
There were a lot of things I wanted to do by staying on here: Get the fleet plan sorted, the fleet itself, the network, the aerospace, the balance sheet sorted, get the cashback to where it needs to be. Once I got all those in place, then I will feel relaxed about the team taking on, because I didn’t want to hand them a mess. I wanted to get it back where it needed to be, and I felt I could bring real value to that in the time I was still staying on. So far so good, our cash is right back where it was, in fact, it’s better than it was. Our profits were right up until the oil prices came along at triple the cost it was a year or two ago. Demand was coming back, yields were high, cargo is gone through the roof. Our fleet requirements through the mid-2030s are in place, though we see holes around 2024, 25, 26. So we are getting there. Is it possible by the end of April or May that we will be in good shape so that we have a clear pathway? My view is yes.
Meaning that would be the time for you to go?
The problem is that the losses have come down from US$20 billion to about four by the end of this financial year at the end of next month. I guess what I said is what I’ll do is get myself on track so that next year we break even or make money again. They’ll probably are going to say: ‘You managed to get it down here, so you need to stay on to make sure it works.’ And I say ‘no, I don’t have to now. You can actually leave it to the guys.’ What I am probably going to do after leaving the role of Emirates President and CEO, and I said this to the chairman, I’ll probably keep my fingerprints on the interior designs, and he is very happy about it. So I might just pop around and go to Seattle or Hamburg, everybody will be happy about that move, it could be another good way. I will probably remain as an advisor to Sheikh Ahmed in all things aviation.
