A strong performance in Europe and the drop in oil prices are expected to reflect positively in Emirates airline’s annual results due on Thursday.
“It [2014] is probably the second most profitable year in our history,” said Tim Clark, the Emirates president, at the Arabian Travel Market (ATM) in Dubai. “We saw fuel coming off in the second part of the year. We didn’t hedge at all. We took advantage of the affordable oil price.”
Emirates’ operations in Europe including Greece, Spain, Portugal, and Italy were “surprisingly better than expected”, he said, despite a more than 20 per cent fall in the value of the euro against the US dollar in the 12 months through to the end of March.
“Europe has been very strong for us … Certainly our flights in all three classes were pretty full, including first class,” said Mr Clark. The airline reported a 43 per cent increase in profit in 2013 to Dh3.3billion compared with Dh2.3bn in 2012.
Mr Clark attributed the latest result to the company’s “nimbleness” and ability to adapt.
“We can move A380s from one route and put it on another, we can do these sorts of things,” said Mr Clark. “When the Russian rouble went south, we took our A380 off Moscow and put it somewhere else.”
In recent months, Arabian Gulf carriers – namely Emirates, Etihad and Qatar Airways – have been criticised by their European and US rivals. In January, the US airlines Delta, United and American, released a 55-page document detailing allegations of unfair government subsidies to Gulf carriers and other financial incentives that they claim were in breach of the open skies agreement.
Emirates in particular is accused of receiving a multibillion dollar bailout from the government of Dubai when a fuel hedging transaction went wrong in 2009. The document alleges that Emirates benefited to the tune of $2.7bn in subsidies from the government's assumption of fuel hedging losses via the Investment Corporation of Dubai, and $1.6bn in letters of credit.
“We have never been subsidised. We never received from the government any special treatment,” Mr Clark said. “We have grown this business, when I came in 1985, from nothing to 235 to 240 aircraft today and we have created an airline that is probably one of the largest, most successful in aviation history.”
The airline’s balance sheet stood now at between $25bn to $30bn, a sharp increase from “the $10 million that the government gave us”, he said.
“We maintained our profitability,” he added. “We have Dh18bn in the cash book at the moment. When somebody tells us that we were subsidised in that timeline and fails to identify where we were subsidised, then you are talking to the wrong people.”
The US coalition began collecting evidence against Gulf carriers about two years ago, when investigators and forensic accountants were hired to determine the amount of government subsidies provided to Gulf airlines.
Now they have asked the US administration to review the open skies agreement with the UAE and Qatar, and potentially freeze any allocation of additional route capacity to America.
Mr Clark did not provide a timeline as to when Emirates would respond to the subsidy allegations.
The chairman of the airline, Sheikh Ahmed bin Saeed Al Maktoum, said at the ATM yesterday that Emirates should be given adequate time to respond to the allegations made in the document.
“We will prove we are right and there are no subsidies,” he said. “We have all the data but putting it all together takes time. They have been working on this for a couple of years. We should be also be given sufficient time to answer these allegations.”
selgazzar@thenational.ae
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