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Qatar Airways reports a record $ 639 million loss



Qatar Airways publishes today its annual report for 2018-2019 and the results are rough .

You have to read quite a bit in the report to see how bad things are. The headline of the press release, which reports the results, simply says that the report "highlights strong overall revenue growth."

Then the first sentence notes that the results "underline the success of the airline and are at the heart of sound financial health in face the prolonged illegal blockade of airspace against the state of Qatar. "Personally, this is not my subtraction from these results …

Qatar Airway reports a loss of $ 639 million

Qatar Airways today reported a net loss for the last year of about $ 639 million . Last year, the airline lost about $ 69 million, and they defined it as the most challenging year in their history. This year's results represent an almost tenfold increase in the company's losses.

I will note that while these results are audited and technically accurate, this is probably not equivalent to losing the "free market" of the same amount to another airline, for example, Hamad International Airport is also government-owned, so the airline pays much lower fees than other airlines would pay at the airports at their hubs.

Why is Qatar Airways losing so much money? [19659008] There are very important numbers besides the loss, so let's look at some other key figures:

  • Passenger revenue increased by 14.3%, while capacity (measured by available seat kilometers) increased by 13.5%; increased revenues in excess of increased capacity sounds like good news
  • Cargo revenue increased by 16.8%, while capacity (measured in tonnes of kilometers available) increased by 11.8%; again, increased revenues far outstrip increased capacity here
  • Airlines added 11 destinations to its itinerary and 25 aircraft to its fleet

Qatar Airways blames these results on the loss of mature routes, higher fuel costs, currency fluctuations and, of course, the ongoing blockade with their neighbors.

There is no denying that the Gulf Blockade has a huge impact on their business:

  • Airlines need to fly longer routes to avoid certain airspace, which increases their fuel costs and reduces the use of aircraft [19659009] The airline had to disrupt routes to several countries, including Saudi Arabia and the UAE, which were their two largest foreign markets

But there is no ultimate view of this blockade, so at this point it seems to be a continuing reality for them.

Qatar Airways 'effective chief executive, Akbar Al Baker, had the following to say:

' 2018-19 was a year of achievement in the face of disaster for Qatar Airways. Despite challenges that are not analogous to the aviation industry, I am very proud that we have increased our fleet, expanded our network and seen total revenues increase to QAR 48 billion ($ 13.2 billion), an increase of 14 %. The number of passengers is increasing, the capacity measured by the available seat kilometers has increased and our Cargo business is now the largest in the world.

2018-19 was still a challenging year and, although disappointing, the Group posted a net loss of QAR 2.3 billion ($ 639 million) – due to the loss of mature routes, higher fuel costs and currency fluctuations – the core foundations of our business remain extremely stable.

Our success is due to unwavering faith in our strategy of giving our passengers the best, backed by the persistence and hard work of our employees. I look forward to 2019-2020 with optimism and confidence that our growth will continue and will serve even more countries around the world. "

My God, His Excellency is of considerable importance to the condition of his airline (frankly, he can't do it wrong either):

  • " Despite the challenges that are not analogous to the airline, "really? Worse than 9/11 was for US airlines?
  • "The basics of our business remain extremely solid" – and these basics will be that if you have bottomless pockets you can maintain increasing capacity and revenue, or…?
  • Our Success – Come Again?

Bottom line

Look, I'm a big fan of Qatar Airways innovation and on-board product. I also think the US airlines unfairly separate the Gulf carriers in their attacks.

However, I am not sure at this point that I am receiving the Qatar Airways strategy. They plan to keep growing, though it sure seems that the more they grow, the more they lose.

What are some of the major challenges they face that will improve next year? Do they think the blockade will end? Do they think there will be less currency fluctuation? Do they think fuel costs are falling?

So yes, these results are disturbing. Of course, the reality in the Middle East is that everything is fine as long as the government is ready to finance them. But we also saw how this strategy works for Etihad Airways when Abu Dhabi has enough …

What do you do with the results of Qatar Airways?


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