Emirates sees bumpy ride

Unrest in the Middle East and North Africa could hit revenue at Emirates by 3-5 per cent and Japan's nuclear crisis will slam the air travel market there, the head of Dubai-based airline said.

But unlisted Emirates, one of the Arab world's biggest carriers and a sector bellwether, has been able to shift capacity away from the turmoil sweeping the region and expects business in Japan to roar back, President Tim Clark said.

As tumult grew when protests swelled, Emirates halted service to Libya and cut back flights to Tunis and Egypt.

"In the early stages it was taking us down 5 or 7 percentage points for seat factor," he said. "When we realised it wasn't a flash in the pan - that it was going to stay with us - we obviously had to stop flying to Libya, we reduced Tunis, we reduced Cairo. We brought Cairo back in again, by the way."

Asked what the sales impact would be, he said:

"Surprisingly not as bad as we would have thought. If it continues we may be down 3 to 5 per cent in income, if that. If we had left it as it was, it could have been 3 to 5 per cent, but as we retuned the capacity ... we restored that, so we are now back up to high 70s, low 80s seat factor and of course in April as we go through the Easter period we are completely sold out."

Airline industry data show at least 100,000 fewer seats a week flying to or from Egypt and Tunisia.

In Japan, where a huge earthquake and tsunami killed tens of thousands and crippled a nuclear power plant that has been leaking radiation, the market could fall 40 per cent.

"This has been a profound shock to everybody in Japan. I'm not sure whether they have got the appetite to go overseas and trade or go as tourists. I don't think outbound Japan is going to be very strong," he said in an interview on Wednesday embargoed for release on Thursday.

"I think the Americans will avoid Japan for quite a long time simply because of the Chernobyl effect and the perception issues. I think that market could be 20, 30, 40 per cent down, if the truth be known. I would say until the end of this year it's not looking good."

No finance problems

"Surprisingly (Japanese airport) Narita was at 75 per cent seat factor last week for us. You've got lots of people going out, not so many people going in, but there is still travel going on. We'll stay there as long as it safe to do so."

He expected a huge influx when reconstruction work starts.

Uncertain business conditions had not affected Emirates' financing or fleet expansion plans, Clark said, adding it had funding in place for all the Airbus A380 superjumbo jets it will have delivered until March 2012.

Emirates will eventually get 90 A380s and would order more if it had room for them all. "I'd like 120 but we can't fit them in, unfortunately," he said.

It would continue to tap financial markets for funding.

"Even when the world's banking system was under huge threat in 2009 and 2010 we had no problem in financing our aircraft because we are considered gilt and that is without government guarantees...," he said.

"It is simply based on the fact that we have $4 billion on our balance sheet, we have a very strong record of profitability, we have a good business model. The bankers are very relaxed about debt provision for what we do."

Clark was in Vienna - home of rival Lufthansa's Austrian Airlines - to try to seal a deal on flight numbers beyond October. Signing fair competition clauses remained open.

"I'm hoping that sense will prevail and that we will be able to demonstrate -- at least to the Austrian government -- that we are not here on a freebie. We don't get free oil or free money or whatever it is they say and that we are quite happy to sign up to this. If that is the case maybe it will all go away."

Follow Emirates 24|7 on Google News.