Qatar Airways has posted a record $1.9 billion loss for the 2019/2020 financial year, blaming not only the COVID-19 pandemic but also an ongoing blockade by a Saudi-led bloc of Arab countries, the liquidation of Air Italy and a change in reporting standards as part of a deal struck with U.S. authorities to address allegations the government-owned airline was being propped up by state bailouts.
The results mark the third straight year that the airline has reported a loss, going from -$69 million in 2017 to -$639 million in 2018. In comparison, rival Etihad Airways reported a $1.95 billion loss for 2016 and a further $1.52 billion loss for 2017.
Qatar Airways blamed the airspace blockade imposed on Qatar in 2017 by Saudi Arabia, Bahrain, Egypt and the United Arab Emirates for suddenly plunging to a loss in 2017 and which continues to challenge the carrier. Earlier this year, the airline won a court case to challenge the blockade but legal action continues in an attempt to resolve the dispute.
But like every other airline, it’s the COVID-19 pandemic that has had the biggest impact on the airline’s finances. The airline’s chief executive Abkar Al Baker, however, remains upbeat arguing that once those ‘exceptional items’ are excluded 2019/2020 resulted in stronger revenue and increased passenger numbers.
“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,” Al Baker explained.
“Significant progress has been achieved in the three-year transformation plan, which began pre-COVID-19 and will position the Group’s operations and practices to meet the current challenges,” he continued.
The often outspoken chief executive remains confident that Qatar Airways will “emerge stronger from this difficult period”. Perhaps, in part, from the $2 billion capital injection the Qatari government has already sunk into the airline to keep it afloat during the Corona crisis.
Started just months but before the COVID-19 pandemic decimated the aviation industry, the airline has also embarked on a three-year transformation programme. Details of the programme remain sketchy but Qatar Airways said it was designed to make the carrier more streamlined and efficient.
“For many years, the rapid growth of the airline has often been at the expense of the simplicity and clarity of our internal processes and practices, leaving us open to obstacles and legacy ways of working,” the airline said of the transformation programme.
The hope is to return Qatar Airways back to profitability within three years.
Qatar Airways was also impacted by the decision to liquidate Air Italy back in February in which the airline owned a 49 per cent share. Al Baker says he was willing to continue supporting Air Italy and was committed to making it a success but ultimately the majority shareholder decided to pull the plug on the loss-making venture.
Despite efforts to cut costs and streamline the business through an extensive transformation programme, the effects of the Corona crisis are likely to be felt a lot harder in next year’s financial results. Next years losses are likely to dwarf the losses reported today.
