After years of rapid growth fueled by some of aviation’s biggest-ever jet deals, Dubai Emirates is reviewing its fleet requirement in light of the demise of the Airbus SE A380 jumbo and a deteriorating global economy.
Speaking in an interview in London, president Tim Clark said he’s seeing “signs of diminishing demand”, and the rate of growth falling off as the strains from trade tensions to political upheaval weigh on economies around the world. Hong Kong, for example, has seen the so-called seat factor drop by 10 percentage points in the wake of weeks of continued protest, he said, with freight demand also “greatly affected” by the upheaval.
“We’re not in a good place at the moment, but we’ll deal with it,” Mr Clark said. “At the moment, I don’t see any green shoots”, and bottoming out might take 3 to 5 years, he said.
Even before global demand took a turn for the worse, Mr Clark had initiated the review, partly driven by end of the A380 that has been a major cornerstone of the carrier’s expansion. With Airbus closing production after the final run of planes is built, Emirates will retire the A380 in the next 10 to 15 years and will “look at range of alternatives to maintain the structure of network”, Mr Clark said.
The review signals shifting priorities for Emirates, which turned itself into the world’s largest international carrier by deploying the A380 and the original 777 to funnel global travelers through its Dubai hub. Mr Clark, the plan’s architect during 16 years in charge, has acknowledged that the very biggest jets may be nearing the limits of expansion at the airline and that some cities may be better served with a different fleet makeup.
The Arabian Gulf carrier is mulling the fleet profile as part of a wider study begun in February after it decided that the A380 could no longer remain the lynch-pin of operations with Airbus reluctant to invest in the slow-selling model. The work is expected to be concluded in time for November’s Dubai Air Show, the primary venue for the company’s order announcements.
Emirates announced a $21 billion deal for 30 A350-900s and 40 A330-900neos earlier this year in tandem with the move to scale back A380 deliveries, though the order has yet to be signed off.
The Dubai carrier slashed its order for the A380, for which it’s by far the biggest customer, by 39 planes to 123 after reaching an impasse with Rolls-Royce Holdings on the price and fuel efficiency of the latest batch of aircraft. While Airbus is now running down the superjumbo program, a further reduction in the remaining backlog could mean the production line might have to shutter earlier.
