With crude oil prices having touched $135 a barrel on Thursday, Emirates' fuel costs have soared taking up 43 per cent of expenditure from just 30.6 per cent only a month ago, according to the company's top executive.
"Fuel currently accounts for 43 per cent of our total costs, as against 31 per cent we declared at the end of April during our annual results for the financial year 2007-08," Emirates' President Tim Clark told Emirates Business. "In fact, until last week, fuel accounted for about 32 per cent of our total costs. It is well above what we had thought of."
Clark also said that if prices continue to rise at this rate, Emirates Airlines would need to revise its cost-saving targets yet again. He told Emirates Business recently that the airline plans to increase its cost-saving targets by 50 per cent this year to $150 million (Dh551m) due to escalating oil prices. Before that, officials had said it would seek cost savings of at least $100m.
"With soaring fuel prices, we will need to increase our cost-cutting targets even more. However, I cannot say yet by how much. We have a team working on it," Clark said. "However, Emirates would be in a stronger position than most other airlines because we have a well spread network. So absorbing costs is much easier for us," he added.
The carrier, whose full-year profits topped the $1bn-mark for the first time in the financial year 2007-08, fuel costs totalled Dh10.3bn in the year compared to Dh7.5bn a year earlier.
Emirates also paid $500m extra than originally budgeted for fuel.