Qatar Airways has today revealed their annual report for 2017/2018, which covers what the airline calls the most challenging year in its 20 year history.
Qatar Airways says that:
- Revenue grew by 7.22% compared to capacity
- Revenue per available seat kilometer grew by 9.96%
- The airline had a net loss of 252 million QAR, which is about 69 million USD
The airline says that the lower revenue growth was “directly attributable to the illegal blockade since 5 June 2017, which impacted departing seats by 19%.” Cargo revenue increased by 34.4% against capacity, which I guess isn’t much of a surprise, if for no other reason than the need that the country has had for goods due to the blockade.
The airline had to cancel 18 routes due to the blockade, and says that 14 new destinations have been added during the fiscal year. The airline notes that these new routes come with launch costs, which contributed towards the losses.
Qatar Airways’ CEO, Akbar Al Baker, had the following to say:
“This turbulent year has inevitably had an impact on our financial results, which reflect the negative effect the illegal blockade has had on our airline. However, I am pleased to say that thanks to our robust business planning, swift actions in the face of the crisis, our passenger-focused solutions and dedicated staff, the impact has been minimised – and has certainly not been as negative as our neighbouring countries may have hoped for.”
These losses are much lower than I was expecting. As a point of comparison, Etihad posted a 1.5 billion USD loss in the same period, though that stemmed largely from their botched investments in other airlines.
If nothing else, presumably Qatar has spent millions of dollars just on extra fuel, given how much longer many Qatar Airways routes are due to the blockade.
For that matter, I wouldn’t put too much weight into Qatar Airways’ disclosed results here. I’m not saying they’re fabricating anything, but rather when the government owns the airport, airline, and just about everything else, then the financial results for the airline alone may not paint an accurate picture.
The entire press release from Qatar Airways reads a bit like a North Korean victory speech. So before seeing the actual results, I thought to myself “what kind of results would Qatar Airways want to put forward?”
Al Baker has been making the rounds in media for the past year talking about how the blockade is unfair, and about how it will cause the airline to post a lost. So obviously there was going to be a loss, but at the same time they probably don’t want to post a big loss, or else people may be concerned about whether they’ll stay in business, and it will give some satisfaction to their competitors.
I had thought to myself that the airline would post a loss but that it wouldn’t be that big, and it looks like that’s exactly what has happened.
Bottom line
It has been great to see the way Qatar Airways has handled the blockade, and it’s clear that the government stands fully behind Qatar Airways’ strategy (unlike what we see with Etihad and Abu Dhabi). A 69 million USD loss is significantly less than I was expecting, and I’m sure I’m not alone in that.
But I wouldn’t view that loss in the same light as a 69 million USD loss for an airline that isn’t owned by the government, given that the airline isn’t paying “retail cost” for many things in Doha.
What do you make of Qatar Airways’ losses?
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