More carriers likely to go bust: Emirates
Emirates Emirates president Tim Clark has said more international carriers will go bankrupt this year as fuel costs and sluggish economies undermine profitability.
April 1, 2012
By Donald Urquhart
Emirates president Tim Clark has said more international carriers will go bankrupt this year as fuel costs and sluggish economies undermine profitability. “We can reel off a whole load of airlines that are teetering on the brink or are really gone,” Clark said in an interview with Bloomberg. “Roll this forward to Christmas, another eight or nine months, and we’re going to see this industry in serious trouble.”
Airline profits will plunge 62 per cent in 2012 to US$3 billion, equal to a 0.5 per cent margin on sales, as oil prices rise, the International Air Transport Association (IATA) said recently. Emirates’s fuel bill accounts for 45 per cent of costs and
may jump by an “incredibly challenging” $1.7 billion in the year ending 31 March, according to Clark.
In the US, more filings for Chapter 11 protection are likely, while smaller carriers operating in the Indian Ocean region and in Africa face “difficulties,” Clark said. The industry couldn’t survive a further
10 or 15 per cent increase in fuel prices, especially with the European Union’s.
carbon emissions trading system about to add to costs, he said.