UPDATE – As probably the last airline to report is 2020-2021 results, Qatar Airways announced a QAR 14.855 billion loss for the most recent full financial year on September 27. While double that of the QAR 7.007 billion loss of 2019-2020, the result is predominantly affected by a one-off impairment. Qatar itself is relatively satisfied with how it weathered the first full year of the pandemic. Fleet impairment hurts Qatar Airways.
The airline’s financial year runs from March to March, so it includes the start of the Covid-crisis in March 2020 well into other phases of the pandemic until March this year. While other airlines were forced to stop flying, Qatar Airways continued operations albeit at reduced levels and with an adapted network that despite lockdowns and restrictions never dropped below 33 destinations. It made Qatar the largest international operator, pushing Emirates from the top spot in IATA’s ranking. Right now, the network is back to 140 destinations.
It translates into lower revenues of QAR 29.287 billion compared to QAR 50.957 billion in the previous year, but an operating loss that actually is slightly better: QAR 1.050 billion versus 1.129 billion. Qatar even improved its operating result before working capital changes or EBITDA to a QAR 6.610 billion profit, up from QAR 5.450 billion.
Of its revenues, Qatar earned QAR 7.971 billion from passengers (37.020 billion the previous year) but double cargo revenues to QAR 18.491 from 9.928 billion as benefitted from higher yields in the cargo business. The carrier deployed extra capacity through its full-freighters and converted passenger aircraft and flew 2.7 million tons, up from 2.6 million in 2019-20. May 2020 was its busiest month, with 183 cargo-only flights.
Impairment on A380s, A330s and MAX
Qatar Airways took an impairment loss of QAR 8.406 billion on its assets as it grounded ten out of sixteen Airbus A330s and all ten A380s and switched to A350s and Boeing 787s. Group CEO Akbar Al Baker has said on numerous occasions that it is unlikely that Qatar will operate its A380s again, as in the current market with increased oil prices they are too expensive to operate and not environmentally friendly. The impairment, which also covers Boeing MAX 8s that were ordered for Air Italy, confirms that the airline has little confidence in the return of the double-decker, which was introduced in the fleet in 2014.
However, the Australian website Executive Traveller reported on September 29 that Qatar will bring five A380s back into service again, quoting Al Baker in an interview. He explains his U-turn by saying that Qatar needs capacity as the grounding of A350s over a paint quality issue is expected to last longer.
After criticizing the A380 for its (fuel) inefficiency, Qatar now seems to bring five of them back in service in November. (Airbus)
As a result of the storage, Qatar’s net fleet was down by twelve aircraft to 253, including 208 passenger aircraft, 26 cargo aircraft, and 19 executive jets with Qatar Executive. Of these, 146 aircraft are leased. On March 31, the A350 fleet included 34 -900s and 19 -1000s, the 787 fleet has 30 -8s and seven -9s, the 777 fleet has nine -200LRs, and 48 -300ERs. A total of 74 777s and A350s have now been fitted with the QSuite Business Class product. The single-aisle fleet counted 29 A320ceo’s and three A321ceo’s. Qatar has firm orders and Letters of Intent for over 200 aircraft.
Qatar raised its share capital by issuing 1.1 billion new shares, resulting in a cash injection of QAR 11 billion. A share premium of QAR 1.63 billion listed in the 2019-20 report as a legal reserve, was converted into ordinary shares. Cash and cash equivalents almost quadrupled to QAR 24.485 billion. Interest-bearing loans increased to QAR 55.458 billion from 35.303 billion.
The company significantly reduced its workforce last year to 36.707 compared to 56.110 in the previous year, the lowest level in the past five years. This brought operating expenses of salaries and allowances down by one-third.
Despite its own financial difficulties, Qatar Airways continued to invest in other airlines in which it has a share. It subscribed to the €2.7 billion rights issue in International Airlines Group (IAG) and increased its share to 25.1 percent. It kept the 10 percent share in LATAM and supported the carrier with $250 million when its sought Chapter 11 bankruptcy protection in May 2020. Qatar retains 9.9 percent in Cathay Pacific and 4 percent in China Southern Airlines.
Al Baker summarized the year as follows: “There are three words that I believe best describe Qatar Airways Group’s response in the past year – strength, resilience, and commitment. Strength to not shy away from taking a risk or avoiding difficult decisions, resilience in remaining focused and not allowing events to overcome us, and commitment by never reneging on our promises to customers, partners, and employees.”
Active as a journalist since 1987, with a background in newspapers, magazines, and a regional news station, Richard has been covering commercial aviation on a freelance basis since late 2016.
Richard is contributing to AirInsight since December 2018. He also writes for Airliner World, Aviation News, Piloot & Vliegtuig, and Luchtvaartnieuws Magazine. Twitter: @rschuur_aero.
