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Emirates hints at higher fares as oil hits new record
Emirates airline may seek cost savings of at least $100 million (Dh367 million) and raise fares as higher oil prices threaten the profits of the Middle East's largest carrier, the company's president said in Berlin on Thursday.
- By Himendra Mohan Kumar, Staff Reporter
- Published: 01:24 March 7, 2008
- Image Credit: Gulf News archive
- Emirates airline may seek cost savings of at least $100 million (Dh367 million)
Dubai: Emirates airline may seek cost savings of at least $100 million (Dh367 million) and raise fares as higher oil prices threaten the profits of the Middle East's largest carrier, the company's president said in Berlin on Thursday.
Oil prices hovered around $106 a barrel yesterday on the New York Mercantile Exchange, largely due to the decision by the Organisation of Petroleum Exporting Countries (Opec) to leave crude output levels unchanged amid volatile market conditions.
"We'll have to raise fares and strip costs to compensate," Tim Clark told Dow Jones in an interview. He did not elaborate which fares the airline might raise and by how much.
Clark said that fuel now accounts for 30 per cent of Emirates' costs, up from about 14 per cent in 2004. Clark also said the airline is considering cost savings of "at least $100 million in the coming financial year and higher ticket prices".
Analysts have warned that crude oil could go up to $120 in weeks. "We have moved into a higher price range. There appears to be a structural change in the market and I think the market is adjusting to a new price range," said Kate Dourian, Middle East editor of energy information provider Platts.
"When the demand picks up again after the second quarter drop, some analysts have predicted oil prices touching $120 per barrel. I think it's possible that prices may reach that level before the presidential elections in the US," Dourian added.
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