Emirates Airline growing as it's spending

DUBAI, United Arab Emirates - Emirates Airline has ordered a jaw-dropping 245 wide-body planes, but the company's president shuns suggestions that he wants to create the world's biggest airline.

"I'm not bothered personally if that makes us the biggest or not," Emirates president Tim Clark said in an interview.

Aviation analysts say that, in fact, the airline's unprecedented growth rate would make it the world's largest within the next decade.

At last month's Dubai Air Show, Emirates ordered 120 Airbus A350XWB jets, 11 additional A380 superjumbos - increasing its total order of those aircraft to 58 - and a dozen Boeing 777-300ERs. Together, the orders will more than double its current fleet of 112 planes.

Amounting to $34.9 billion at list price, they bring the value of the carrier's total order book - including other aircraft - to a stunning $60 billion.

Clark, who helped establish the company in 1985 and has been its president ever since, says his main aim is for the airline to keep its focus and remain an industry trendsetter in terms of quality of service.

"The business model saw us focusing on the geocentricity of Dubai, focusing on the fact that within that eight-hour flying zone we had four billion people," he said.

Emirates serves 99 cities in 62 countries with new ones being added at an average of one every two months. A second U.S. route, between Dubai and Houston, was inaugurated this month. Other North American destinations are New York and Toronto, and Clark said routes to two more cities in the United States, which he declined to name, were in the plan for next year.

At a time when many airlines are feeling the pinch of high fuel prices and a declining dollar, Emirates Airline expects to top $1 billion in profit in the fiscal year ending March 31 on revenue of $8.1 billion. The forecast profit would be an 18.5 percent increase from the year before.

This is partly because of the currency peg between the UAE's dirham and the U.S. dollar. Emirates reports in dirhams, but a large proportion of its earnings is in euros and pounds sterling, and the dollar's slide "actually makes us look good," Clark said.

Emirates also has benefited from the general economic boom in the United Arab Emirates, whose thriving economy has been fueled by high oil prices and a rapidly growing tourism industry.

Statistics show that nearly half of its passengers nowadays are people making connections in Dubai.

Over the past 15 years, Dubai International Airport has developed into one of the largest hubs in world aviation. A new airport, said to be the world's largest, is now under construction near Jebel Ali, a massive complex comprising a port, airport, residential areas, hotels and a free trade zone about 12 miles from the city center.

Emirates Airline is wholly owned by the government of the United Arab Emirates - but its chairman, Sheikh Ahmed Bin Saeed al-Maktoum, last month indicated that 30 percent of the company may be sold in public markets.

Emirates' operating costs are significantly lower than those of its European or U.S. rivals, according to Michael Dyment, an aviation analyst at Nexa Capital Partners, a Washington corporate-finance group.

He credited Dubai's zero tax rate, the airline's ability to tap credit markets to buy new airplanes because of Dubai's good credit standing, and the fact that legacy costs such as pension burdens are low.

It does not hurt to operate in a country where the laws prohibit trade unions.

"One of the key advantages they have over others is that the airline itself is not subject to the same labor rules," Dyment said. "They are able to keep organized labor away, so they don't have a unionized environment that has been detrimental to other carriers."

John Strickland, director of JLS Consulting, a London-based aviation consultancy firm, noted that the airline is rare in civil aviation because it has kept the same top management team since inception.