Qatar Airways annual loss widens to 7bn rials on Covid-19 lockdown
Airline received a 7.3bn rial advance from its government shareholder that has been converted into shares
Qatar Airways reported its third consecutive annual loss, citing the impact of the Covid-19 pandemic and the ongoing boycott of its home country by neighbouring states restricting its flights.
The state-owned airline group posted a widening net loss of 7 billion Qatari rials (Dh7.06bn) in the fiscal year ending March 31, compared with a restated 4.75bn rials a year earlier, Qatar Airways said on Sunday. Total group revenue and other operating income rose 6.4 per cent to 51.1bn rials as it carried more passengers.
The airline also said it received a 7.3bn rial advance from the government of Qatar in March when the group's accumulated losses exceeded 50 per cent of its share capital. The funds were subsequently converted into new shares following approvals at a September 24 extraordinary general meeting.
"2019-20 has been one of the most difficult years in the airline’s history," Qatar Airways said in a statement.
Adding to the airline's woes during the fiscal year was the liquidation of Sardinia-based Air Italy, in which Qatar Airways had a 49 per cent stake.
The Covid-19 pandemic is the worst crisis in the global aviation industry's history, as it brought international air travel to a near-standstill. The crisis forced cash-strapped airlines to ground aircraft, slash jobs, defer aircraft deliveries, cut costs and seek government assistance.
Qatar Airways had said in March it was burning through its cash reserves and would eventually seek government aid, but had not disclosed the scale of this funding until now. In June, the airline said it will defer Airbus and Boeing aircraft deliveries due in 2020 and 2021, cut jobs and reduce salaries to deal with the impact of the pandemic.
Qatar Airways is also grappling with a ban from flying over the airspace of the UAE, Saudi Arabia, Bahrain and Egypt after they severed economic ties with the nation in June 2017. This has forced the airline to cut services to these countries and fly longer routes.
In the 2019-2020 fiscal year, the airline carried 32.4 million passengers, up 9.8 per cent from a year earlier, as capacity grew 3.2 per cent during the fiscal year. Passenger revenue grew by 8.9 per cent. Freight volumes increased by 2.8 per cent year-on-year to 1.49 million tonnes.
During the pandemic Qatar Airways flew to at least 30 destinations. The airline said it currently operates flights to more than 90 destinations.
Accounts show it finished the year with its total liabilities more than doubling to 99 billion rials, from 45bn rials at the end of its 2019 financial year. This is partly the result of the recognition of more than 34bn riyals worth of lease liabilities as accounting standards changed.
Qatar Airways has grounded its fleet of Airbus A380s "as it is not commercially or environmentally justifiable to operate such a large aircraft in the current market", it said in the statement. The airline’s fleet of 49 Airbus A350s and 30 Boeing 787s are best suited for long-haul routes to Africa, the Americas, Europe and the Asia-Pacific regions, it said. The airline has 205 passenger aircraft, 28 freighters and 25 executive jets in its fleet.
In its 2020-2021 fiscal year, the airline is reviewing renewed launch dates for destinations including Almaty in Kazakhstan; Dubrovnik in Croatia; Lyon in France; Nur-Sultan in Kazakhstan; Osaka in Japan; Santorini in Greece; Siem Reap in Cambodia; and Trabzon in Turkey, according to its annual report.
The International Air Transport Association expects the global airline industry to suffer a net loss of $84.3bn (Dh309.38bn) this year.
"Never before in the history of commercial aviation has our industry faced a challenge of this scale and magnitude," Akbar Al Baker, Qatar Airways group chief executive, said in the company's annual report. "We have yet to fully understand the long-term consequences of the virus upon our industry as a whole."
Updated: September 27, 2020 09:21 PM