Listen in as Emirates President Tim Clark shares a glimpse into the behind-the-scenes conversations he's had with Airbus about the A380’s future. He also shares his candid views on engine availability, delays to the 777X program and the EU's proposal to include Dubai in the EU ETS sustainability initiative.
Thank you to our sponsor, DXC Technology, helping airports and travel operators connect the systems that keep passengers moving. When one delay impacts multiple systems, DXC connects airport platforms so the whole operation can respond as one, for smoother journeys.
Learn more here
Subscribe Now
Don't miss a single episode. Subscribe to Aviation Week's Window Seat Podcast in Apple Podcasts, Spotify or wherever you get podcasts.
Discover all of our podcasts at aviationweek.com/podcasts
AI-Generated Transcript
Victoria Moores:
Hello everyone, and thank you for joining us for Window Seat, our Aviation Week air transport podcast. I'm Air Transport World Europe and Africa bureau chief Victoria Moores, and I am delighted to welcome you on board. This week I'm joined by Emirates Airline president Sir Tim Clark. Now under your leadership, Emirates has grown to become one of the world's largest and most iconic airlines, establishing Dubai as a leading global hub. Now you've been in this industry for 54 years with British Caledonian, Gulf Air, Emirates, and Sri Lankan. In amongst that, 41 of those years has been with Emirates, including 23 as the airline's president. So obviously that's an awful lot of experience of the various ups and downs of the industry, and we find ourselves in one of the supposedly relative downs at the moment. Obviously, we'll explore that during the conversation. So, what we're going to look at is how Emirates is adapting its network strategy in the face of the geopolitical unrest that we're experiencing now, aircraft program delays, and also your desire for extra-large aircraft to continue feeding the Dubai hub.
(01:19):
So welcome, Sir Tim.
Sir Tim Clark (01:21):
Thank you.
Victoria Moores:
Let's start with the political environment right now. Obviously in the Middle East, we've gone through a period of unrest. How is that impacting your model?
Sir Tim Clark (01:35):
It's not nearly as bad as a lot of people would have thought. Today, we are operating 91% of our fleet and our operation. We have only about seven of our global points that are not operable, such as Iran and Iraq and one or two others. The incoming streams, both passenger and cargo, are very strong. In fact, they are better than they were this time last year. This is a strange paradox. Nobody would've thought given what's going on, but that is the case. But we kept our operations intact. We've done our best to make sure that we are meeting the requirements of the markets. Obviously, the fact that it's still coming to us, irrespective of what may be a perception issue, the government saying don't travel across this region or whatever, doesn't seem to have stopped people from wanting to fly. In the early weeks when it started to be a little bit more focused on the UAE, for instance, we didn't operate and a lot of people weren't traveling.
(02:32):
But after a period of time, certainly by June, July, it started to move again. And cargo has excelled obviously because there are some maritime choke points at the moment, which is distorting the maritime channels, traditional channels. So, a lot of the cargo that is based on just-in-time or things like pharmaceuticals or some of the production things in automotive, whatever, we're carrying a lot of those. So, cargo is a really good story taken together but not doing badly.
Victoria Moores:
So, in actual fact, what you're saying is that demand is remaining very buoyant. What about the cost side? Obviously, fuel costs have increased. Has that impacted your network or what you're able to do at all?
Sir Tim Clark (03:16):
One, with the fuel costs as it is today, we are already hedged well. A good chunk of our fuel is hedged at much lower levels than they are priced today. We're dealing with what's happened with the remainder of where the fuel has gone up today to $111. Irrespective of that, the airline is still quite profitable, not as good as it was this time last year, only because of the fuel. So had that fuel been back where we were, we would be ahead in the first half year. Two, cash on the balance sheet is as strong as it ever was. The forward sales that sit on our balance sheet are also unchanged in its percentage of that total income of the cash income that we have that's on the balance sheet. So, this month compared to the same month last year, we are ahead of where we were on our income streams.
(04:11):
The cost of course has changed because of the movement of fuel in that unhedged element of our fuel uplift. So, we're dealing with that. But then in May 2009, fuel was $140 and the world was going to implode and we all thought, "Well, that's the end of the airline industry." Within a month it went down to $30. So, I'm not saying that's going to happen, but we've all got to deal with this, whether it be the low-cost elements, the budget carriers, whether it be some of the carriers like ourselves who go on ultra-long-range missions carrying a lot of fuel to make those missions. But I don't say, can I trade the business at these levels? Yes. Can I trade the business profitably? Yes. Can I trade the business with cash positivity? Yes. So, it's going to take a lot more than that to lock us out of the water than this kind of thing because we're kind of always on it.
(05:14):
Victoria, there's not a minute that goes by without all of us sitting in that C-suite and working with me. We're always on it.
Victoria Moores:
And your Dubai hub plays such a central part in your model. Do you think that what's happened recently has exposed a vulnerability in that dependence on one central hub when that central hub could be impacted by whatever the crisis is?
Sir Tim Clark (05:44):
Well, one must ask if it was London or Paris or Frankfurt, what would they do? I mean, would you transplant Air France into Marseille? Would you transplant Heathrow into Glasgow? I don't know.
Victoria Moores:
But when you look at those examples, say for Air France KLM Group, they've got a multiple hub and multiple airline strategy.
Sir Tim Clark (06:05):
They couldn't possibly cope with... If you knocked out one, do you think the other one would take the slack? No hope in hell, sorry. We are where we are. We are what we are. We have to deal with whatever is being thrown at us, and that has been part of our growth for 41 years. So, Dubai today, it's not the city of old because the government there, a lot of people say it's very cosmetic, it's very glitzy, glamorous. What they don't see is the degree of infrastructure, the tens of billions that they've spent on whether it be transport, whether it be sewage, whether it be power, water, schools, roads, et cetera, et cetera. So, it has enormous resilience, both physical as well as the qualitative element of the resilience, i.e. Businesses there, the workforce there, et cetera. So, it is at the moment standing in a very, very, let's say precarious position because of this geography.
(07:17):
I don't think the government of Dubai looks at it like that. They just say, "We'll tough it out. We've always toughed it out. In the end, we've always gone on. Move along." That's part of our ethos as well. If I was to be a person to say I'm giving up, this is never going to work. Well, you're talking to the wrong person, but it comes from the belief that Dubai will deal with this and in the belief that it'll come to an end and then we will just move on. Not as if nothing's happened, there will be some changes as to how people regard the politics, not on my pay scale of what goes on in the region. But do I think it'll retreat? No, it won't. So, the notion that we would be under threat or have to move, no, that doesn't... It'd take a severe amount of damage to stop us even thinking about not operating.
(08:07):
But don't get me wrong, this isn't maverick, this isn't reckless. This safety of operation is absolutely... As the accountable manager for the airline for safety, I take that very seriously because it'll be on me if something happens as a result of recklessness.
Victoria Moores:
Yeah. It sounds as though from everything that you've shared that your focus is very much on quality of service and safety, not necessarily in that order and also toughing it out and getting through any crisis that might come your way. While we're on that subject, you have had an impact to the business from aircraft delivery delays and you're also not expecting to take the early production [Boeing] 777-9s, the 777Xs that are scheduled to come into the fleet. How much is that impacting you?
Sir Tim Clark (09:00):
Well, these aircraft were built in 2018, 2019. They have been standing on their wheels for all that period of time. And as I said earlier, we made it absolutely clear to Boeing some years ago that we won't be taking those, and that's both verbal and written to them. So, the notion that we would ever be taking those is one thing. Even if they were under production, including production, I don't know when the engines are going to be delivered for them. Here we are coming up to the end of the year. I still do not know from Boeing and Airbus, apart from the first three or four, when these aircraft are going to be delivered. Boeing haven't given us a ramp up rate, although they're probably in a better position to do it than GE, but to meet the ramp up, which is their own one a month, two a month, seven a month, 12 a month, et cetera, they have nearly 700 sold.
(09:54):
Large chunks of those were sold for delivery between 2020 and 2029. Now here we are coming up to the end of the year of ‘26 and not one has been delivered. So, the compression in the contracted delivery period is horrendous, frankly. But on top of all of that, as if they didn't know what that was and GE, the sole engine supplier probably didn't know what that was; they can't provide engines. I say, guys, you knew that these aircraft were going to be delivered at some point and you knew that it was the largest single airline order in history when we signed for it in 2013 with [not audible] and Lufthansa did it just before us and [not audible] had, we sold nearly 300 of those aircraft we bought for those. In terms of value, it was unheard of. So, you knew then and you've known all along what it is that you are going to have to step up to.
(10:51):
Why at this stage are we having to wait even now at the end of this year? I don't know what's going to happen. It's totally unacceptable.
Victoria Moores:
What dates have you been given even as a guideline?
Sir Tim Clark (11:04):
We were told that it's a moving goalpost, quite honestly. We go back to 2020, it was going to be October 2021, it was going to be 2023, it was going to be October 2025. Here we are at the end of 2026 and we still don't have a firm picture. What we do know is that the airframes are under production. All the interior design work that we've done, the [not audible] equipment, the seats, galleys, toilets, whatever else is coming, is there in Boeing and they've been put on the airplane. So, job done. Now we just have to wait until certification, ETOPs certification. After that, the airframes are coming along, but then when there are no engines, it slows the whole airframe production down. So, Boeing have got to build the interiors, Lufthansa's interior, Singapore Airlines’, whatever, all the way... They can't put engines on set to take them out of sequence and wait for the engines to come on so they can release.
(12:11):
It's a nightmare for them, I admit. But between Boeing and GE, the two of them should have got together and said... So, at Farnborough I had the famous bean can thing, but at that point I had separate meetings with both Boeing and General Electric and said, "I need to know exactly what's going on here." I mean, we're not talking about Cessna 150s, we're talking about these $350 million airplanes and we've got 170. You still can't tell me when they're going to come. That is totally delinquent. It's not acceptable. And that was three months ago. So here we are proceeding to the end of the year and I still don't know. I think probably we put so much pressure on them that they will give us a delivery stream which will be heavily caveated or so restricted because they really don't want to contract for those particular dates.
(13:12):
So as my friend Carsten Spohr said, "I'll take them when they come.” As if to say I'll wait for when they're ready to deliver them to me. In the meantime, like everybody, we're all scrabbling around trying to meet demand with the old aircraft.
Victoria Moores:
Shifting to the opposite end of the spectrum, so the [Airbus] A380, which has obviously been a very iconic aircraft for Emirates, what's your latest on the timeline for taking those out of service?
Sir Tim Clark (13:42):
2041.
Victoria Moores:
So, it has stretched to the back end of the bandwidth that you gave for A380 service?
Sir Tim Clark (13:49):
Yes, of course. The aircraft was originally scheduled under its design for 100,000 hours or 20 years, a certain amount of cycles. So that's of course, as we've gone through its life, that has been extended to about 24 years. We might get 25 years. So, on the basis of inputting that and having to ground them because although they're still flyable, they are beyond their certifiable or certified lifespan. They will have to come out unless something else changes. But they are so popular. And last year, the A380 was the most profitable asset in our fleet and that was the most profitable year we've ever had and one in the industry today. So, it tells you how successful, how popular that airplane is. Now that we have it with four [cabin] classes and we've revamped the whole aircraft, it's a piece of work actually. It really looks beautiful inside and our passengers absolutely love it, as you can see.
(14:47):
It's the party animal of the sky.
Victoria Moores:
And yet you have seven of them on the ground at the moment.
Sir Tim Clark (14:55):
Most frustratingly, yes. With no engines. Well, we have engines, but they need overhauling. We can't fly them, although the engines are okay, but they're run out and you can't fly them once they run out, so that's it. So, we have to wait for our friends at GE and Pratt to get it sorted out. Another frustration.
Victoria Moores:
Yeah. Do you have any timelines for when those seven might come back into service?
Sir Tim Clark (15:21):
No. No, I do not know. It's driven by the turnaround time, contracted 85 days, coming out over 350 days. So, an engine goes in, instead of taking 85 takes... So, you can see why it's taking them so long to take the backlog because it's nearly four times the time to turn an engine around. Don't forget, when you overhaul an engine, it's not just changing the oil. You are basically replacing… It comes out as a new engine, and it costs an awful lot of money to do that. But despite that, they still can't seem to get the materials in to do it to the level they contract for.
Victoria Moores:
How important are very large aircraft to your model? So clearly the Emirates model is about shifting huge volumes of passengers over Dubai to whereabouts they want to go to. It doesn't look as though the manufacturers at this point in time are going to develop any new ultra-large aircraft. What does that mean for Emirates?
Sir Tim Clark (16:25):
Well, I think one, that is a fact, the A380 will go. Today we have it with 484 seats in some luxury. The aircraft that are coming behind them, the 777-9, are going to be very nice, but they won't have that luxurious space, particularly in the economy cabins. They'll be nice. Don't get me wrong, we've done a lot of work to push side walls out, bigger windows, make it look as best we can. But when you get onto an A380 in economy, the walls do this, they go out. You've got these big window reveals, windows and all that, but they look voluminous. Ceilings are much higher, and there's spaces in those huge doorways, which we can't use for anything. I wish I could, but we can't because they're there for exit reasons. So, people are wandering around. In the premium economy on the main deck that we've put there, you've got that between the L1 and the L2 doors behind the flight deck, you've got three toilets, you've got the galleys behind, a completely enclosed cabin.
(17:27):
We've had riots down there. I mean, the number of parties that go on down there and then people come up... I'm on the upper deck in one of the first... You want to come and see this bizarre go down? Oh my God, Christmas. This is just fantastic. They love it. Absolutely love it. Two-four-two seating, 36-inch pitch sleeperettes, et cetera. I've now put in electrical premium economy plus these electrical dividers which gives them a bit of privacy as well, up the food, up the staff. Well, that's really gone well. So, the point I'm making is that with that 56 on the main deck in the premium economy, plus what we've done in business, with the lounge at the back, upgraded the first class, done a lot of changes in economy, that is going to be a very difficult one to replace. The 777-9 is the largest we could get, obviously.
(18:21):
As I said, we've done all those things to make it look... And it will have some very nice features. Actually, I'm not going to tell you what they are, but they will be very nice features. And the [Airbus] A350 is already out there. The -900 is in three classes. That's proving very popular, but is it the same as getting on a 777 with the space of the 777? Probably not, but it's the best we can do. They call it the XWB.
(18:48):
It's the widest they could do in terms of the economics they were planning. So, you're left with what we're doing on the A350. The A350-1000 is out there, so that's a clone of that, except on the A351 that if we bought it, we'd have a first class. And I've already worked with Airbus on the designs of that and what it would look like. If they stretch it again to what they're possibly calling the -2000, I'm not sure that they've made the decision there, but if they do, it'll be more of the same, just give us more seats and more gizmos and gadgets to put in it. And if I can get Boeing to make the -10 a stretch of the -9, and we've told them where we think the frame should go and how many frames, that gives us quite a break in whichever segment of the configuration, economy, business, premium, et cetera.
(19:38):
So that's it. That is it. What you see is what you get. And I say to the heads of these companies, "Is that it guys? Is that it?" And you're going nowhere. Remember, the 747 came to market in 1969, ‘68. We're still flying. The 737, ‘62. Need I go on. Yet, you still have the 737 flying. The new ones you've brought to market, you've got the 787, you've got the 777, but your job is to take the industry on. Your job is to look to the next 50 years at what's going to be happening. Not say, "That's it. I wouldn't do that. It was me."
Victoria Moores:
Did Airbus not do that bold, brave move with the A380, and yet perhaps there aren't as many A380s in the market ignoring Emirates as Airbus would like?
Sir Tim Clark (20:36):
I think in some respects, the demise of the A380 was driven by the, dare I say, the inability of many carriers to make it work. It is a beast that you cannot operate 10 or 15 of them profitably. You've got to have at least 50 to 70 of those to get the economies of the scale of production where you integrate it into something we do in Dubai. If you've got them fitting around strange, it's never going to work. So, we could see that's why we bought 125 of them because we knew that we could scale on that basis. But if Airbus, when they were in the mix, we had a load more on order and we were talking to them and the East-West trade, the first Trump administration, remember they were fighting each other, cutting the Mexican because of the free trade agreements.
(21:28):
Oh my God, everything started to go south. The A380 was a problem for that. For a lot of the carriers they had and couldn't make them work. So, there was no more coming down the line. [Former Airbus executive] John Leahy, bless him, created the neo. That didn't get traction. At that stage of the game, I was not comfortable that they were believing that there was a business model to be able to take it on and go further. So, it kind of reached the point where they said, "We're not selling anymore, Tim. If you were to buy 200, we keep it going." I was thinking, "It's a bit of an ask even for Emirates. Can't even fit them into our thing." So, what happened happened. But, the COVID resurgence and the mass that went into that resurgence, you heard what I said about people traveling twice as regularly, paying almost double the price.
(22:19):
Where does that take you? What it told us that for decades we've been underselling our products, and they must have been laughing themselves at the bank saying, "Whoa, that's great. Give me that. No problem. I would pay double for that." And they did, and they still traveled more. So that suggested the demand was increasing at a pace that perhaps we should bring back the A380 into the mix. But of course, when I look at United, Delta, Air France, [Air France-KLM CEO] Ben Smith, and whoever was running British Airways at that time, there was no appetite for it. So we were, as usual, the voice in the wilderness. I think there are a number of believers in Airbus, as I've said to them many times, with a drop-in ultra fan technology into the XWB engine with a new wing, a much reduced fin tail, with a greater use of composite, but not totally because the titanium aluminum composite has actually become very, very, almost as light as the others, but it has qualities that composite doesn't have.
(23:24):
So, you improve the aerodynamics of the thing. You change out all the systems because don't forget the aircraft was designed in the '90s. Now, if you take A350 technology or 787 technology, cross-fertilize those into a new A380, my view, 25% reduction in costs to operate, 25% shock horror. So instead of burning 12 tons an hour, I'm burning nine. Now, you're not far ahead of some of the twins on that basis. So, it was all part of... But then what were they going to sell it at? Where would it operate? I know where I'd operate. And if they did, I'd replace all of the ones we've got and buy the extra hundred with that field come out. No problem if they did. And at one point they said, "I tell you what, we'll build it, but you pay for it. Plant, production, et cetera, et cetera." I said, "No, you've got to re-certify it.
(24:28):
And then you as a manufacturer, I'm telling you, we would buy them. There's a minimum of a hundred." They said, "No, that's not going to cover the break even. Actually, we need 250 to make it work." So, if you sign for 250, then we've got a wash on the costs.
(24:46):
But if we were to buy a hundred, there will be a lot of gasp and startling shock shock horror choking going on in the boardrooms of all the major carriers, because if Emirates is allowed to have all the ones that it's got plus another hundred, you've got 220 widebodies in that mega hub. Be careful, guys. So, what we need to do, we either run screaming to our governments to protect ourselves, which happens [in Europe], or we buy and compete. And the beauty about it is, to the point I was making earlier, the global demand is growing. People tend to think the cake is staying like this. It really isn't. If you look at Africa, A340, I'm forgetting what those costs are. They're going nowhere. You can't even fly between some of the big cities, and their reliance on the mobile phone is Legion. I mean, without that, the place would be.
(25:40):
And yet they're screaming, look at the size of Lagos. Lagos is 20, 30 million people. It's a powerhouse, although all the things are... Look at Accra, look at some of the other cities growing now. Look at South America as well. Oh, we need to go on.
(25:59):
Chile is powerful in rare earth, in all minerals. It's a very wealthy country. So, it goes on and I'm thinking, if I had an A380, I already can get it to Los Angeles and Houston nonstop. Now imagine we had all those things I talked about. I could get into places like Santiago nonstop. Think about that. It would scoop up South America. I could reach Sao Paulo. I do anywhere every day with an A380, but all the other places, Buenos Aires had our eyes and goes up and down with the politics of the place, but it's a hugely powerful... Panama. I mean, neither go on. It's huge.
Victoria Moores:
You mentioned in amongst that about the potential competitive response to Emirates gaining more ground and more size. One of the challenges that is going to be coming up for the next six months, I would say, is we have a new EU emissions trading system proposal that would bring your Dubai hub within the EU ETS. What are your thoughts on that?
Sir Tim Clark (27:20):
Well, again, I'm concerned, unsure about where the 5,000 kilometers came from. And actually, I do know where it came from and why the EU was put up to do that. It basically embraces the hub carriers that present the greatest threat to the European carriers. Let's be quite honest about that. Is there any reason they're doing it? The EU can do what it likes with regard to how it deals with emissions. It's up to them. I am not 100% sure that the 27 members of the project are fully on board with it and whether it's a commission driven thing. I think that has to be sorted out. When it comes to execution, they need to look at the reciprocity angle of all of this. And I think they got such a pushback after the last one, which failed because certain countries in the mix said that ain't going to happen.
(28:13):
If you do, there'll be a problem for you because we'll reciprocate.
Victoria Moores:
That's unfortunately all we've got time for today, but I'd like to thank you for taking the time to join us on Window Seat today and for sharing your thoughts and experience.
Sir Tim Clark (28:27):
Thank you, Victoria. Always a pleasure.
Victoria Moores:
And before I sign off, I'd also like to say thank you to our producer, Natalia Pelayo. And of course, a huge thank you to you, our listeners, for following Window Seat. Make sure you don't miss us each week by subscribing to the Window Seat podcast on Apple Podcasts or wherever you listen. This is Victoria Moore's disembarking from Window Seat.
Related Content
