SYDNEY--International airlines face a "perfect storm" from high fuel costs, a slowing global economy and volatile exchange rates that could see many carriers forced to downsize, Tim Clark, the President of Dubai's Emirates Airline said in an interview Tuesday. "It's a perfect storm of adversity now facing airlines," said Mr. Clark. "The euro is going south, the pound is going south, fuel costs are still too high." Mr. Clark, a key and long-serving executive at Emirates, said he wasn't surprised that Qantas Airways (QAN.AU) on Tuesday announced a sharp drop in profits and cautioned that many international carriers could be forced to retrench due to the difficult trading conditions. He also dismissed reports last month that the Dubai-based airline was interested in taking a stake in Qantas, after Abu Dhabi-owned Etihad Airways said Tuesday that it acquired a 4% stake in Virgin Australia. "We're not up for buying a stake in Qantas," said Mr. Clark. Like Qantas, Emirates has struggled amid tougher trading conditions and higher costs especially for fuel. Last month, the airline said net profit fell 72% for its latest fiscal year after taking a US$1.6 billion hit from high fuel costs. Mr. Clark said that debt markets had become tougher for all airlines and that Emirates isn't sure that it needs refinance a US$550 million Islamic bond that matures this month. "U.S. capital markets are still open," said Mr. Clark. Write to Andrew Critchlow at andrew.critchlow@wsj.com
