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Qatar Airways Reports $2 Billion Loss for Year Ended March 31
Qatar Airways published its 2019-2020 annual report on Sunday, in which it reported that the airline recorded a loss of $2 billion for the period from April 1, 2019 to March 31.
The combination of the current airspace blockade against the Qatar, the liquidation of Air Italy, changes in accounting policy and reporting standards and the COVID-19 pandemic crisis were among the most important factors leading the Qatar Airways Group to report a net loss of 7 billion Qatari rials ($1.92 billion) for the fiscal year 2019-20.
But the airline was sure to stress that not everything is in the red, which is evident in the increase in the group’s general income and other operating income to 51.1 billion rials, a 6.4% increase compared to last year. Passenger revenue grew 8.9% with capacity growth of 3.2% when measured in available seat kilometers.
Qatar Airways carried 32.4 million passengers during the year, an increase of 9.8% over the previous financial year, cargo carried increased by 2.8%, and passenger traffic at the carrier’s superhub at Hamad International Airport increased by 8.6%. Qatar Airways invested 16.8 billion rials in fleets and other assets during the year and had a cash balance of 7.3 billion rials at the end of the year.
A Year of Hard Knocks
Despite the year-over-year growth in some areas, the company still reported a negative balance 10 times greater than that of just a couple years higher, $639 million against the $69 million loss for the period 2017-2018. The airline has since June 2017 suffered from a blockade by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt due to the alleged ties with extremist groups. This forced Qatar Airways to readjust its routes, which exacerbated the negative impact in this fiscal period.
Besides this factor, there is another one that has been rapidly overlooked: the company has been hit earlier by the COVID-19 pandemic. Qatar has its commercial strategy in China oriented, in addition to passenger transport, to air cargo. In this sense, it acquired a 5 percent stake in China Southern Airlines, thus giving it access to this market that was in rapid growth until the beginning of this year COVID-19 exploded in China, directly and indirectly affecting its activities and income.
This fiscal year included the financial hit of Air Italy’s liquidation. In 2017, Qatar acquired 49% of Air Italy with the intention of entering the European market with a local operator and competing firmly with Alitalia. However, majority shareholder AliSarda — which held 51% of the company — was not willing to lose more and decided to liquidate the airline last February.
Finally, part of the carrier’s negative balance is due to the renewal of its fleet. The airline has orders for 27 Airbus A350-1000 XWBs and 50 Airbus A321neos, according to the Airbus website. It also ordered 60 Boeing 777Xs, five Boeing 777 freighters, and 23 Boeing 787-9 Dreamliners from Boeing, according to the U.S. manufacturer’s website. While a reduction in those orders is on the table, no formal steps have been taken in that direction.
Qatar Airways Group Chief Executive Officer Akbar Al Baker said he believed the carrier’s financial situation would improve in the months and years to come.
“I have every confidence that Qatar Airways Group will emerge stronger from this difficult period and will continue to innovate and set the standards that our competitors can only hope to emulate. We will continue to be the airline that millions of passengers can trust and trust through good times and bad, and proudly fly the flag of the State of Qatar around the world,” he said in a statement.
Throughout the pandemic, the Qatar Airways network never fell below 30 destinations with continuous service to all five continents. Since then, the airline has rebuilt its network to more than 650 weekly flights to more than 90 destinations on six continents.
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