Qatar Airways has just reported its results for the 2019-2020 financial year, and as you’d expect, the situation is rough. The airline lost about three times as much money as in the previous financial year, which was otherwise a record-breaking year for losses.
Qatar Airways reports $1.92 billion loss
Qatar Airways has today reported a $1.92 billion loss for the last financial year, compared to a $639 million loss the previous year. The airline suggests that the results “highlight the airline group’s resilience” in “the most challenging period in global aviation’s history.”
Qatar Airways explains that the past financial year has been one of the most difficult in the carrier’s history for a variety of reasons, including:
- The ongoing airspace blockade against Qatar by Bahrain, Egypt, Saudi Arabia, and the United Arab Emirates
- The liquidation of Air Italy, which Qatar Airways owned a 49% stake in
- The COVID-19 pandemic
- Changes to accounting policies and reporting standards
The airline suggests that excluding these exceptional items (minor details!), the results at both operating and net levels would have been better than those reported in the previous year.
That seems like an odd argument to make. The airline also faced the Gulf blockade the previous year, so obviously results would be better if you’d remove the Gulf blockade from the equation for this year but not the previous year, no?
Air Italy liquidated earlier this year
Qatar government injected $2 billion into airline
It was also disclosed that the government of Qatar “advanced” the airline about $2 billion, which has since been converted into shares.
To recap, the government is already a 100% shareholder, it “advanced” the airline $2 billion, and it converted that into more shares? So the government’s stake in the airline went from 100% to… 100%?
To be clear, I’m not judging Qatar Airways for getting government money here. After all, US airlines got $25 billion in payroll support. Rather I’m just amused by the semantics.
Qatar’s government has given the airline $2 billion more
This is the tip of the iceberg for Qatar Airways’ losses
It’s important to note that the financial year ended on March 31, 2020. Global aviation really only came to a standstill in the second half of March. So while Qatar Airways’ operations to China and beyond were no doubt impacted prior to that, I would expect results to be way worse in the coming financial year.
Expect results for the next financial year to be much worse
Ways in which Qatar Airways’ performance improved
In which ways did Qatar Airways’ performance improve in the past financial year?
- Operating income increased by 6.4%, to $14 billion
- Passenger revenue grew by 8.9%, with a capacity increase (based on available seat kilometers) of 3.2%
- The airline carried 9.8% more passengers, for a total of 32.4 million passengers
As Qatar Airways CEO, Akbar Al Baker, describes these results:
“Despite the momentous challenges our Group has faced in 2019-20, Qatar Airways Group continues to remain resilient, reporting strong underlying fundamentals. If not for the exceptional circumstances of fiscal year 2020, our results would have been better than the year before.”
Qatar Airways saw an impressive revenue boost
Qatar Airways will focus on A350 & 787
The airline highlights how it has continued flying throughout the pandemic:
- Qatar Airways’ network never fell below 30 destinations, and the airline has rebuilt its network to 650 weekly flights to over 90 destinations
- Between April and July 2020, Qatar Airways became the largest international airline
- The airline is currently focusing operations on A350s and 787s, while grounding the A380
Qatar Airways is focusing operations on the A350 & 787
Qatar Airways reported a massive loss of over $1.9 billion for the past financial year, which is a loss three times as big as in the previous year. This is attributed to the ongoing Gulf blockade, Air Italy going out of business, and the coronavirus pandemic (though the financial year ended in March, so there are lots more losses coming there).
Some of Qatar Airways’ underlying operating statistics look good, so the airline has that going for it. I’ll be curious to see what the next financial year looks like for Qatar Airways.
Are you surprised by Qatar Airways’ results?