Qatar Airways posts $69 million loss amid Gulf row
DUBAI - Qatar Airways announced that it lost $69 million in the financial year that ended last March 31, the clearest admission yet of the effect sanctions imposed by the Saudi-led Arab Quartet have had on the Qatari economy.
The Qatari national airline said the period had been “the most challenging year” in its 20-year history.
Saudi Arabia, the United Arab Emirates, Egypt and Bahrain broke off diplomatic relations with Qatar on June 5, 2017. They closed all land, sea and air links with Doha over its close ties with Iran and alleged support for radical Islamist groups.
Qatar Airways said the boycott directly affected its revenues. The airline said seat occupancy on flights leaving Qatar was down 19% and its fleet had been forced to fly longer routes, raising fuel costs. It cancelled flights to 18 destinations.
The economic implications of the airlines’ modifications of its routes were the source of additional pressures. “It is painful because there are many routes that slide as much as 2 1/2 hours longer, and there are routes that are narrow-body routes where we had to convert to wide-body in order to carry enough fuel to go the longer distance,” said the Qatar Airways CEO.
The airline tried to mitigate the effects of the dispute by establishing flights to 14 new destinations, increasing flights on existing routes and leasing aircraft to other airlines. Its effort was not, however, fully successful.
“New destinations come with launch costs and the necessity to establish market presence, which resulted in an overall net loss,” Qatar Airways said.
The airline said it carried 29.2 million passengers in the year to March 31, down from 32 million a year earlier.
“This turbulent year has inevitably had an impact on our financial results,” said Qatar Airways Group CEO Akbar al-Baker. However, he said, “the effect has… certainly not been as negative as our neighbouring countries may have hoped for.”
The dispute cost Qatar Airways access to 18 cities, including popular destinations in Saudi Arabia and the United Arab Emirates. It had to operate longer flights on some routes to avoid the airspace of the four countries, which increases costs.
The company warned in recent months that it might need to ask the Qatari government for a capital injection.
The option of a government bailout was raised last May by al-Baker but described as “some time away.”
“At the moment I don’t need it, but if this blockade continues then I’m sure that the government will be prepared to inject capital, because Qatar Airways is a very important economic tool,” He said.