Emirates’ Clark says oil, Ukraine tensions threaten aviation recovery

A nascent recovery in the aviation industry could be derailed by higher fuel prices and potential conflict in Ukraine, according to the longtime head of Gulf carrier Emirates. 

“A war in Europe, aggression over there will have very disruptive effects on the industry,” Emirates President Tim Clark told Bloomberg TV on Thursday. The repercussions would go beyond any conflict itself, to “what happens after that—in terms of sanctions, possible closures of airspace.”

Russia has assembled an estimated 150,000 troops near the border of Ukraine, prompting warnings from the U.S. and diplomatic efforts to avoid war. Russia has repeatedly denied any plans to invade. 

The tension has been a factor in a more than $20-a-barrel rally in Brent crude prices since early August. Oil, now hovering just below $100 a barrel, is a headwind for the aviation industry, raising fuel costs and forcing airlines to increase ticket prices, Clark said.   

Still, the outlook for Emirates is improving, with Australia reopening and New Zealand hopefully soon after that, Clark said. The veteran executive said he’s been surprised at how quickly Emirates was able to return to profitability.

“Summer will be the pivotal point,” Clark said. “If by June and July we do not have those markets restored it will be a different story. My own view is that they will come back—I’m not so sure about China, but the other areas in the Southeast Asian theater will be back with us.”

777X, Low-Fly Incident

Clark reiterated his view that Boeing Co. isn’t likely to deliver the coming 777X wide-body until 2024-25. Ihssane Mounir, Boeing’s senior vice president for sales, said earlier in the week that the U.S. planemaker is still anticipating entry into service in late 2023. 

“This particular airplane is vital to the network and the fleet plan going forward over the next 10 years and more” he said. 

Separately, regulators in the United Arab Emirates issued a preliminary report on a Dec. 19 incident where an Emirates plane flew too low after takeoff. 

The UAE’s General Civil Aviation Authority classified the shallow climb as “serious” and said the cockpit voice recorder was overwritten, without explaining how it happened.

The investigation into the root cause, airline procedures and any other safety matters is ongoing.

An Emirates spokesperson declined to comment on the GCAA’s report when reached by Bloomberg.