Qatar Airways running out of cash, despite increased capacity
Qatar Airways was one of the few airlines around the world to maintain a decent level of connectivity amidst the coronavirus outbreak. So much so, that it has actually increased capacity from March 29, 2020, adding extra seats to and from Australia to operate repatriation flights. However, the extra revenue stream is not enough: Qatar Airways CEO Akbar Al Baker warned that the airline is running out of cash.
“We have enough cash to take us through a very short period of time,” Al Baker said on Sunday, as reported by Reuters.
Qatar Airways would have to seek financial support from the Qatari government, the sole shareholder of the airline, according to Al Baker. Cost-cutting measures, including employees taking unpaid leave and Al Baker forfeiting his salary until the airline returns to full operations, have been taken up by the Doha-based airline.
On March 26, 2020, Qatar Airways announced a significant increase in capacity, specifically to Australia. All in all, the carrier added 48,000 seats to Brisbane, Melbourne, Perth and Sydney, with daily services between the cities from the land down under and Doha, Qatar. Several countries have utilized the increased seat numbers to repatriate their citizens from Australia and other countries in Asia-Pacific.
While Al Baker reiterated that the airline is “not taking advantage” as this is a moment to “serve people who want to be with their loved ones in a very trying time,” the airline’s situation even prior to the coronavirus outbreak was precarious.
A locally developed political conflict between Qatar and other Middle Eastern nations resulted in a blockade of the former, including a ban by neighboring countries for Qatar-registered aircraft to use their airspace. As a result, the airline ended FY2019 with a net loss of $639 million (QAR2.3 billion) due to an increase in fuel costs and losses of some of its most important routes.
Despite the fact that it was the second year in a row with a negative financial result, that did not stop Qatar Airways from splashing the cash on investments in stakes in other carriers. A 5% stake in China Southern Airlines (ZNH) , acquired in early-2019, an increase in investment in International Airlines Group (IAG) (IAG) from 21.4% to 25% in February 2020 and negotiations to acquire a 49% package of shares in RwandAir were started in early-2020, including the completed purchase of a 60% stake in Rwanda’s new airport in its capital Kigali.
Some investments, however, were less successful than others. The joint-Italian venture Air Italy suspended operations in February 2020, despite Qatar Airways putting a significant amount of money and other assets, like the airline’s former Airbus A330 aircraft, into the airline.
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