Qatar Airways Deferring 50% Of Employee Salaries

Filed Under: Qatar

We’ve seen airlines around the world cut salaries and reduce hours for employees, though Qatar Airways is taking a different approach to this than most airlines.

Qatar Airways deferring 50% of salaries

Qatar Airways is working on reducing and deferring costs, and as part of that, the airline has implemented a “Solidarity Programme,” as it’s called.

With this, mid-level and above Doha based staff are deferring a portion of their basic salaries:

  • Salaries will be subject to a 50% deferral
  • This is expected to last for three months, starting from April 2020, though “the position will be kept under review depending on the economic situation”
  • The company will credit salaries back “as soon as possible when circumstances allow”
  • It’s not entirely clear what constitutes “mid-level Doha based staff,” though it sounds like this isn’t just management

As Qatar Airways Group CEO, Akbar Al Baker, describes this move:

“The entire team at Qatar Airways has worked incredibly hard to take people home over the past few weeks. We have built a strong level of trust with our passengers, governments, travel trade and cargo businesses as a reliable partner when we were needed the most and we continue to offer a schedule where possible and allowed by governments.”

Qatar Airways is claiming that employees across all job levels (including overseas employees and junior employees) have also “offered to take voluntary salary deferrals in solidarity with their colleagues, reinforcing the fact that the Qatar Airways Group family is one who has the best interests of each other and the airline at heart.”

I’d be impressed if that’s true, as I have a hard time imagining their overseas staff were proactively calling headquarters and saying “hey, can you defer 50% of my salary as well?”

Qatar Airways is deferring salaries by 50% for Doha-based employees

Is this actually a salary deferral, or…?

At this point it wouldn’t be unreasonable or surprising to see Qatar Airways cut employee salaries:

  • Their workforce isn’t unionized (which isn’t to say that they should do it, but rather that they could do it)
  • Most employees are working less than usual right now
  • This is an unprecedented situation

What I find interesting here is Qatar Airways suggesting that they’re deferring payment of salaries until circumstances allow them to pay:

  • Qatar Airways was losing money before the COVID-19 crisis started; last year the airline reported a record $639 million loss
  • Clearly the recovery is going to be rough, and the situation will get worse before it gets better
  • Realistically when will employees get their deferred salaries, which are promised “as soon as possible when circumstances allow?”
  • In other words, is the company just making a false promise here and creating unrealistic expectations, or…?

Qatar Airways was losing money before this all started

Qatar Airways needs more capital

Qatar Airways is wholly owned by the government of Qatar. The airline has long argued that they’re not government subsidized, but rather that the government simply has an equity investment in the airline.

In late March Qatar Airways revealed that they’re running out of cash, and will soon need state aid. While the current oil situation isn’t good for the Middle East, Qatar does ultimately have deep pockets, so I imagine they’ll support the airline however is needed (even if some elements of Qatar’s business model seem Etihad-esque… I’m looking at you, Air Italy).

Air Italy liquidated earlier this year

Bottom line

All airlines are struggling now, and Qatar Airways is no exception. The airline was losing money before this all started (largely due to the Gulf blockade), and COVID-19 makes the situation infinitely worse.

Qatar Airways is deferring salaries of employees by 50%, though one has to wonder when the deferred salaries will actually be paid, with things likely not getting better for a while…

I feel bad for employees deferring their pay, since I know many foreign Qatar Airways employees are supporting families overseas with their salaries.

Comments
  1. @ TravelinWilly — Maybe I’m reading this wrong, but it sounds to me like it’s not an actual pay cut, but rather the 50% of the salary being deferred will be paid back in the future, when possible? And that’s also what makes me skeptical…

  2. To TravelinWilly’s point, there is no difference in terms of whether you can use them to buy your breakfast, send the kids to school or pay your electricity bill.
    There may be a difference in terms of whether you get some money at some future point, but then again, there may not.

  3. Flying this airline means you support terrorism. Who would have thoughts terrorists are running out of money?

  4. @ Lucky,

    Back to your remark about Air Italy, I am not sure whether the liquidation is due to QR’s financial trouble or simply to the fact that Alitalia is being re-nationalized (in violation of all EU rules, but Brexit has shown that the EU is not anymore an impregnable fortress which can actually implement its own rules. Also, the present world situation is not exactly optimistic for the EU’s future).

    My take is slightly different from yours, i.e that QR’s intention was for Air Italy to BECOME Italy’s national airline after the likely liquidation of Alitalia, and that it made no sense to keep Air Italy once Alitalia survived. A nationalization is a big move which may not ultimately save Alitalia in the long run but it gives it at least a 5 year grace period and Qatar didn’t want to wait that long.

  5. The middle east 3 (ME3) have been nothing more than playthings for the rich. I have always said once oil drops or a major crisis hits these so called businesses will be at risk. Emirates is the PAN AM of the 21st century A380s verses 747s will be their down fall. Eithad – why did it exist in the first place and QATAR will be a shell of it’s former self. The consolidation is on, long time actual businesses like an AA, a DL, a JAL, a LATAM, etc. . .will survive but these fringe and fake carriers days are numbered.

  6. @Pierre
    Air Italy was liquidated as the majority investor was not willing to out any more money in and QR was not willing to give it money if it couldn’t get more equity. Which it couldn’t as the airline needed to be 51% EU owned for it to operate in Europe as a domestic carrier.
    The re-nationalization came after the Air Italy was already liquidated. EU most likely will allow this as currently they are relaxing state-aid rules so that government can give more direct support to companies. Debt level for some of them could be high enough already that just giving a loan would be more of a hindrance then a blessing.

  7. @John – How high are you? Wdym flying QR means you support terrorism? Jeez, it’s high time you realize that all these Gulf Carriers, and ME3 in particular do NOT support terrorism. These carriers have used their potential to reach out to different corners of the world, and provide better services than American and European carriers, and that is a fact. I am here to enjoy Lucky’s posts and not make any controversial statement, but by your logic, I could even say ‘Do not fly American Airlines because they are owned by the American Government who sponsored …’. Again, I don’t wanna offend anyone, aviation industry is something where you shouldn’t include politics or terrorism. If you do, then don’t call yourself an AvGeek.

  8. @ Klav

    I am not sure that our positions are contradictory: I realize that the Air Italy liquidation was before AZ’s re-nationalization but these things stay a long time in the pipeline, may I add “especially in Italy”, and It is more than likely that QR knew about, or at least expected it when they made their decision.

    Re Debt, and this is not 100% related, a whole new era is dawning: It is still very early to start saber rattling over who is responsible for Covid 19 , but it is already happening and China’s liability will be found overwhelming. I am not among those who believe that nothing can be done against China if they refuse, as is likely, to be held accountable. They are the owners of an astounding percentage of the world’s debt. Once Trump is re-elected (and he probably will be), the US will most likely be a leader in refusing to honor that debt. Short of going to war over this (a real possibility by the way, but they are not in a position to win it and they still need the rest of the world ), a big part of that debt will be disavowed and will probably end up cancelled. As to who owns Alitalia’s debt, it is surely very complicated but the World’s debt situation will be a completely new matter.

  9. @ sunviking82: The six wealthy states’ decadence lifestyles are unsustainable but they have much higher living standards than their US counterparts, thanks solely to their petroleum revenue. Their businesses are headed by the royal families but run by expatriates. The west is suffering from among the highest deaths, deficits, and public defiance/ divisiveness in public policies in the world. Kindly broaden our horizon: Which section of US businesses, governments and justice system that is not catered to the wealthy and powerful? The entrance to the Ivy League colleges? The distribution of the SBA PPP loans for small businesses? The living wage of the rank and file vs the compensation package of the executives? The misdemeanor vs white collar/ corruption conviction and sentence? All the cabinet members, except Mnuchin, are MIA in the midst of COVID 19 crisis but still receive full paid. The US is handicapped in effectively containing the crisis because Trump and his cabinet members are science deniers. The task force is headed by non medical professionals.

  10. Why Qatar Airways had a huge loss?

    – Trying to copy Etihad business model.
    – Latam Airlines investment.
    – Paying football club and football players hundred of millions for marketing, twice.
    – Air Italy investment.
    – Blockade from 4 Gulf countries.
    – Incompetence and greedy CEO.

  11. From what I gather is that its totally voluntary to contribute a portion of the salary back to the company. But what doesnt make sense is how come the Qatari government cant just cut a check to bail the company out? It is a state owned company afterall.

  12. Trust me we are proud to be a part of Qatar Airways. Qatar Airways supports its employees like a family. It provides everything to an employee which makes them feel luxury. We ourself decided to give up on 50% of our salaries until unless the situation is alright. You don’t need to worrg about anything but mind in your own negativity. Qatar Airways will rise again after Pendamic COVID-19.

  13. Qatar Airways has a parallel program being implemented alongside this. Management called it the “cost transformation program” through this, the company laid off hundreds of employees a month ago majority of which where from the technical/ maintenance. Recently they again started, sacking even more. Can’t help wonder what’s next?

    Amidst the crisis everyone is battling around the world, Qatar Airways took a different route alright, they took the “heartless” one.

  14. Leopard:

    Qatar Airways is reducing employee as well last few weeks qatar airways terminated almost 5000 employee in different department including doha and overseas and still counting. I wouldn’t be supprised if they bankrupt or terminate more employees.

  15. Misleading headline. Affected DOH based employees will be paid 5,000 QAR/month of their base salary plus 50% of every riyal above 5,000, up to their base salary. Allowances (of which there are many and for many affected employees will make up more than half of their take home pay each month) are not affected. So a 50% cut on base salary above 5,000 QAR only will really only translate to about 15-20% of take home pay.

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