It’s been several months since Akbar Al Baker, the chief executive of Qatar Airways said he expected his airline to plunge to a huge loss for the 2017-2018 financial year. Speaking at the Eurasia air show in Turkey, Baker described the losses as “substantial”, telling reporters that he expected the airline’s full accounts to be made public in a matter of weeks.
Such are the problems being faced by the government-owned, Doha-based airline that we are still to see exactly what Baker meant by substantial losses – that comes despite more upbeat comments by Baker at the Farnborough air show in which he hinted at just the “possibility” of the airline making a loss in its current financial year.
The financial woes come on the back of a Saudi-led blockade against Qatar – forcing the national airline to close ticket offices in four countries and slash its route network in what were once important markets including the UAE, Bahrain, Egypt and of course, Saudi Arabia.
On top of that, Qatar’s operating costs have shot up as its planes are forced to fly around airspace restrictions imposed by its neighbours – despite protestations from Qatar to the International Civil Aviation Organisation (ICAO) and the International Criminal Court that Saudi Arabia and its allies have been acting illegally.
When the blockade was first imposed in June 2017 we anticipated Qatar Airways would suffer but the airline has proved to be remarkably resilient. Continuing to roll out what many consider to be the best Business Class product in the world, taking delivery of state of the art aircraft and showing no slowdown in its recruitment efforts – especially for cabin crew.
Baker says his airline has been “adapting” to the blockade – much of that has come in the form of opening up new destinations, especially smaller European airports like Malaga, Mykonos and Tallin which Qatar Airways has been able to serve with its fleet of single-aisle Airbus A320 aircraft.
The fleet, which had been previously used to fly to the blockading countries would otherwise be grounded. Yet setting up new destinations – including airport operations, landing rights, and marketing doesn’t come cheap and there’s no way to know whether Qatar Airways is actually making any money off the back of these routes.
Even Baker has admitted that a much-hyped new route to Cardiff in Wales (about a two and half hour drive from London) isn’t performing as well as the airline had initially hoped. And that route is using one of Qatar’s new Boeing 787 Dreamliner aircraft.
“Cardiff is still not performing as we expected it to perform,” Baker has said of the route.
“We are giving it time. We are hoping Cardiff will come around, passenger-wise. Air freight-wise, it’s doing absolutely well – there’s a lot of air-freight demand in and out of Cardiff.”
On that note, the airline has also had to adapt – wet leasing some of its cargo planes to the Air France KLM group. Meanwhile, some of Qatar’s long-haul passenger fleet are being wet-leased to British Airways over the summer while the carrier deals with ongoing issues affecting its own Dreamliner aircraft.
What the airline will do once both of those contracts come to an end remains to be seen.
And now it looks like cabin crew recruitment is dramatically slowing down. We’ve seen recruiters cutting back on the number of Open Day’s they organise each month – despite the fact that Qatar has a reasonably high staff turnover rate.
Still, the recruitment team hasn’t stopped its recruitment efforts – possibly realising that’s it’s far better to keep a small number of new recruits joining every so often rather than letting staff numbers dwindle (just look at the mass-recruitment situation facing Emirates at the moment).
We’ve even seen the airline push back the joining date of a number of successful candidates. The airline has explained the reason for the delays but it’s related to internal issues rather than the candidates application. In some cases, candidates have been held back several months with little or no explanation.
For now, there’s no question that the Doha government will continue to fund its airline. A capital injection is highly expected but with a new financial reporting agreement in place with U.S. authorities, many analysts expect Qatar to start tightening its belt and start acting more like an established commercial airline.
The day’s of rapid, unchecked expansion may be coming to an end.