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Qatar carries on regardless as losses continue to climb
It has been a tough 12 months for Qatar Airways as it endures its Gulf neighbours’ ban on operations and addresses the inevitable impact on its bottom line. Despite these setbacks, the Doha carrier continues to expand across the globe. Chief correspondent, Tom Ballantyne, reports.
Outspoken Qatar Airways group CEO, Akbar al Baker, is not burying his head in the sand when comes to the circumstances of his carrier. Read More » Qatar Airways, he said last month, would be reporting “a very large loss” for the year ending April 1 as a result of the sanctions imposed on the airline’s network by Dubai, Abu Dhabi, Bahrain, Saudi Arabia and Egypt in a geo-political row.
“We don’t know how long it will last,” Al Baker said in Berlin. “As long as it is required we will have to take the losses. We have to be prepared for the worst.” He added the airline would need to find new sources of financing to survive because it has no access to the equivalent of U.S. Chapter 11 bankruptcy protection. This might include an equity injection, something for which the government is prepared, he said.
Visiting an industry fair in the German city last month, Al Baker announced Qatar would add 16 destinations to its network and increase frequency on some routes. “Qatar Airways is tremendously excited to announce further expansion with a significant number of destinations to be added to our extensive global network in 2018 and 2019,” he said.
“This is a direct reflection of our commitment to connecting travellers across all corners of the world in a way that is meaningful and convenient to them. We are committed to continuing our ambitious growth strategy in order to provide our passengers with as much choice as possible and to take them anywhere in the world they wish to go.”
The sanctions were imposed in June last year by Qatar’s neighbours, who accuse the state of Qatar of supporting Islamic extremist groups. It is an allegation Qatar’s rulers deny. It followed U.S. and U.K. travel and electronics bans on citizens from several Middle East countries.
The exclusions have had a crippling effect on Qatar Airways revenue. More than 20% of its income is earned from short haul flights to Dubai, Abu Dhabi, Saudi Arabia, Egypt and Bahrain. The ban on Qatar also excludes Qatar Airways from flying in the airspace of the five entities, which has extended Qatar’s flying times and added to fuel costs.
Pulling back from network expansion is not an option for Qatar. With an operating fleet of 213 aircraft, it also has a massive order book of 50 A320neo, 18 A350-900s, 36 A350-1000s, one A380, eight B777-300ERs, 10 B777-8s, 50 B777-9s and 30 B787-9s, Its freight orders are eight A330-200Fs and three B777F freighters.
In Berlin, Al Baker said Qatar would become the first Gulf carrier to operate a direct service to Luxembourg. Other new destinations are London Gatwick, Cardiff, Lisbon, Tallinn, Valletta, Malta; Cebu and Davao in the Philippines, Langkawi, Da Nang, Bodrum, Antalya and Hatay in Turkey, Mykonos and Thessaloniki in Greece and Málaga.
Frequencies will increase to double daily to Warsaw, Hanoi, Ho Chi Minh City, Prague and Kiev and to three daily to Madrid, Barcelona and the Maldives.
With the demise of Etihad-backed Alitalia, the airline wants to transform Meridiana – renamed Air Italy – into Italy’s flag carrier. Al Baker said the airline would receive 30 B787-8s from the Gulf carrier after Qatar begins taking delivery of the larger B787-9s.
In India, where the airline is proceeding through the final stages of acquiring an air operator’s certificate for a dedicated carrier, bureaucratic hurdles remain, Al Baker said. He added he wanted to buy into Royal Air Maroc even though the carrier is not ready for such an investment.
Nor is a shrunken bottom line curbing the airline’s appetite for sponsorships. Discussions were underway to add to the airline’s sporting sponsorship portfolio, Al Baker said. Already it is the official sponsor of many top-level sporting events, including the 2018 FIFA World Cup in Russia, the 2022 FIFA World Cup in Qatar and the FIFA Club World Cup.
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