April 24 (Bloomberg) -- Dubai-based Emirates, the world’s largest airline by international traffic, won’t invest in Indian carriers unless the government there gives outside investors ultimate control, President Tim Clark said in an interview.
The imminent removal of a ban on foreign stakes won’t in itself be enough to persuade Emirates to bid given the limited influence on offer versus the poor financial records of Indian airlines and the prices likely to be demanded, Clark said today.
“Part of the deal would be a requirement to do certain things,” Clark said. “If we put money into an Indian carrier and then said we wanted to take down the labor force by 50 percent would they let us do it? No. If we wanted to drop airports that were uneconomic, would they let us? Probably not.”
India may delay a decision to allow foreign airlines to buy 49 percent of local operators until the parliamentary session ends on May 22, a civil aviation ministry official said April 20. Emirates, which will next month report a decline in annual earnings, according to Clark, has avoided major airline holdings since selling a stake in SriLankan Airlines back to the island’s government in 2010 following a failed a 10-year investment.
“Frankly it’s not something we’d be prepared to do at this stage,” Clark said of an Indian investment, adding that his company isn’t in talks about a stake in New Delhi-based SpiceJet Ltd., the country’s only listed discount airline, as reported last week by CNBC TV-18, which cited sources it didn’t identify.
There’s also little prospect of Emirates being allowed to serve India with the Airbus SAS A380 superjumbo, given that the government “has its hands full trying to keep its own aviation sector afloat,” Clark said, adding that he’s still hopeful of achieving an increase on the 54,000 weekly seats it flies there.
Earnings in the year ended March 31 were hurt by high fuel costs and currency volatility involving the euro, pound and rupee, which has damaged yields or average fares, Clark said.
That’s after net income rose 43 percent to a record 5.93 billion dirhams ($1.6 billion) in fiscal 2011 as the company deployed the world’s biggest fleet of superjumbos to establish Dubai as a global travel hub and strip traffic from Air France-KLM Group, Deutsche Lufthansa AG and British Airways.
“You’ll see our profits are down,” he said. “We’ve got to start earning our living, working for our keep, because in the old days it was easy. Now it’s hard.”
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