Emirates to look at 777X

In an exclusive interview with Gulf News on the sidelines of the Arabian Travel Market 2013, Tim Clark, chief executive officer of Emirates, discusses a number of topics ranging from new aircraft orders, scope of alliance with Qatar Airways and potential new code share agreements in Europe and North America.

When will you start talking to Boeing about placing orders for new 777X aircraft? And when will Emirates be replacing its current Boeing 777 fleet [175 of those] with the new 777X aircraft, and with how many of those?
 

Tim Clark: Certainly, negotiations with Boeing on the 777X jets will start in the next couple of months, depending on a number of things such as the delivery timeline etc. They won’t be delivered until late 2020 or 2021.

We have to ascertain that this aeroplane is going to do what Boeing and General Electric say it will do. We will not enter into negotiations with Boeing till we are absolutely sure that it is going to be delivered to the specification that we called for, on the timeline that they say it will be, at the price that we want. But we are not in that position quite yet. If they fail on any of those, we don’t go anywhere.
 

I can’t say how many we are likely to place an order for. But it will be a healthy number. What I would say is that we will have 175 777-ERs (extended range) by then. And all those have got to be replaced. So the number will be determined by the fleet replacement cycle, the big Airbus A350 as an alternative, whether we can get more A380s — above the 90 that we will have by November 2017 etc. But that also leaves a very large number of 777-ERs to be replaced. And we have worked very closely with them to get this one [777X] launched and designed. So a lot of it is a result of what Emirates wants.

 

What do you have to say about Qatar Airways exploring alliance opportunities with Emirates?

 

Akbar Al Baker runs a great airline. It is not just similar to what we are doing, equally, Etihad Airways is not similar. We tend to follow the same business models. I think he is quite aspirational in his wish to come closer to Emirates.

We are already quite close — we talk at a high level regularly, but that’s as far as it can go at this point in time because if you go beyond that you start breaching all sorts of rules — such as competition law, competition in the EU, Oceana, North America.
 

And if such an arrangement ever happened – I am not s43aying it will – the burning hoops that you’ll have to pass through to get an arrangement like this through the anti-cartel, competition in the EU and everywhere else, will be quite difficult.
 

I know he (Al Baker) would like to take it further, but there are difficulties there – not of our doing but other peoples’ doing. So let’s just leave it there for the time being.
 

Emirates has been seeking additional landing rights into Canada. And Etihad Airways just recently struck a codeshare deal with Air Canada. Does that make your chances weak to have more rights into Canada?
 

A: I don’t think it so. We will stand on our strengths and our own merits. We have had a standing application with Canada for additional traffic rights for almost 10 years, or more. Neither Etihad nor Emirates have been able to increase beyond their three [flights a week] each.
 

It’s been a difficult time, we know the history, we know what has been happening with the Canadians, and we know there has been a moderation of positions taken more recently. But that’s a political thing. Hopefully, they will see their way to give us more access.
 

What Etihad is doing with Air Canada with codeshare — well, good luck.
 

Could you also potentially seek an alliance with Lufthansa?
 

Lufthansa, we hear, are examining options. Lufthansa was asked a few days ago — you are seeing Etihad and Air France, Emirates and Qantas – what they thought about working with one of those.
 
And they said, maybe. What I am saying is, would I shut the door to that kind of a thing? We are open to a commercially driven — like we have with Qantas — a well-understood partnership that delivers a value to both carriers without any distortion. But there is nothing on the table now.
 

But don’t forget that in 1992 we made that proposition to Lufthansa. We tried that and we got quite a long way down the road, and suddenly Lufthansa pulled the rug. They discontinued negotiations overnight and left me high and dry.
 

Have you made any breakthrough yet with the Indian government allowing your Airbus A380s to land at India’s airports?
 

No. It’s up to the Indian government. That’s all I can say. We haven’t had the seat increase from the Indian government since May 2008. That’s been the standing request for years. Flydubai is operating some of our seats anyways, so they have their points plus our seats. And now, they [Indian government] have refused us to allow the A380s in. So we are just waiting. It’s such a pity.
 

Emirates has a very large number of aircraft – 22 – to be delivered this year. How are you financing the new deliveries? Are we going to see Emirates issuing another bond this year [It has already issued two bonds this year]?
 

I am not sure we will see more this year. But the way we did the last one was pretty good. There is a strong appetite for Emirates debt and that has driven the pricing down. So for us it’s a very attractive financing proposition. We have a very strong balance sheet. And therefore, anybody, whether they are in the retail market for investing or institutions — they know this a good bet.
 

So our ability to raise funds when and where we want to is not something we are really worried about.
 

What is Emirates’ current fleet size and where do you think it will reach by 2020?
 

It’s around 200 aircraft at present. We know we have 240 aircraft planned to be in use by 2017 and that is an amount of incremental units and retirement of the old fleet. We are in the process of getting through 68 of the old aircraft – they all have to be retied. So they will have been finally gone by then.

 

(Shweta Jain - Gulfnews.com)