“We Need the A380 Big Time”: A Conversation with Emirates President Tim Clark
Sir Tim Clark loves the Airbus A380, operates more of them than anybody else, wishes more airlines would try it and has dozens on order. He would also like to buy even more, possibly a lot more, of the biggest passenger jet in the world. But the order for more A380s from the boss of Emirates that many had been expecting at the Dubai Air Show hasn't materialized yet. We're now on day three of the trade show, with no sign it will come before the week is out. And, during a breakfast conversation at the air show on Tuesday, Clark said Emirates won't order any more until Airbus assures the airline that it will keep the troubled jet's production line open for at least a decade.
Airbus hasn't logged an order for A380s since the beginning of 2016, when All Nippon Airways bought a measly three. The airplane is a commercial flop, and Emirates is the only airline around right now that may save it. So the conversation between the president of Emirates and a handful of journalists around a small table on the sidelines of the show was mostly about one thing: Will you, or won't you?
The answer from the president of Emirates was, essentially, that he would like to — but only if Airbus commits to the plane, and if the government of Dubai, which owns the airline, decides that commitment is enough.
"The undertakings Airbus will have to make if we go ahead with a further order is that the line will continue production for a period of 10 to 15 years," Clark said. Emirates has 100 A380s in the fleet and 42 more coming, and those deliveries are happening no matter what: "We have a contract," Clark said. With the airline getting three to four planes a year, "the program is sustained into the middle of next decade." What happens after that is what Airbus and Emirates are negotiating right now, but first "the government of Dubai needs absolute, absolute certainty" that Airbus isn't going to kill the plane.
Without its enormous seat capacity, he admitted, Emirates can't keep up the incredibly fast pace of growth, by European and US airline standards, it's had for years. A380s, with up to 619 seats, keep the Dubai (DXB) hub humming around the clock, with Emirates flights to all inhabited continents.
"We need the A380s big time," Clark said. "It gives me huge flows across the hub to feed multiple city pairs. As soon as you start compressing that, your hub starts to implode, and that’s a big problem for us (...) That’s where the essence of our profitability remains."
London Heathrow (LHR) is a perfect example of this, Clark said — it's an airport with lots of demand and no more room to add traffic slots, so the 500-plus seats of the A380 in three-class configuration are the only way to maximize profit: "Today we have six flights a day into Heathrow. It's extremely profitable for us. If I took it down from 519 seats six times a day, with no other slots, the bottom line would be severely compromised."
But what if Airbus really stopped making the A380? "If Mercedes stops making the S Class, you buy the 7 Series" from BMW, was Clark's metaphor. In other words: "We'd have to adapt and adjust to the X program," the stretched 777s from Boeing that would seat around 400 people.
But what Sir Tim really wants is more of the double-decker planes that only he has this much of an appetite for. In fact, according to him, US airlines should want it as much as he does. And despite the feud pitting Emirates against American Airlines, Delta and United, which accuse the Dubai carrier of unfair competition thanks to government money, he has a piece of advice for them: Buy the thing already. It may be a bit of self-serving advice, but Sir Tim seems sure: "It defied logic that the big three carriers in the US, my friends, don't go with the A380 transpacific," and if that happened, "it’s going to be a walk in the park."
The basis of his view is that global demand for air travel will keep rising while infrastructure won't be able to keep up, and that Wall Street analysts and investors in US airlines just aren't seeing it: "If these people stepped up (...) and made the orders that they should do, I know (that) will drive value for the shareholders, which is all they are concerned about these days."
But just like his American rivals, Sir Tim has to do what the shareholders want, and the A380 order — with the future of the airplane riding on it — depends on the government of Dubai and on the Emirates CEO, Sheikh Ahmed al Maktoum, who's also the uncle of Dubai's ruler, Sheikh Mohammed al Maktoum.
"At a stroke," Clark said, "they can say yes or no."
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