ECONOMY

How Qatar Airways went from making billions to being on the verge of a bailout

The projected losses that Qatar Airways will record for the first time since its history comes after a long period of continued profits. (File photo: Reuters)

From the moment the boycott on Qatar had been imposed, the Qatar Airways crisis has had a snowball effect. Just eleven months since the outbreak of the crisis, Akbar Al Baker who has been managing the airline since 1997 admitted that they could not continue further down without the government support.

The crisis of Qatar Airways echoed the transformation that the carrier undergone; after enjoying much success and making billions it is now facing losses and asking the government for support because the company can no longer stand on its own, as a result of Doha's political positions and the repercussions of the Arab boycott, which made the hardships of the carrier even worse and caused great damage to the Qatari economy.

Although Al Baker has denied that the carrier needs support right away, he did admit that the situation his airlines was in was difficult. According to the Telegraph newspaper, he said that if the Arab boycott continued in the long run, that he would seek governmental support.

And to avoid a new crisis with the American carriers in the event that the airliner does receive government subsidies and despite Al Baker’s admitting that Qatar Airways would eventually need it, he said that “the government will be prepared to inject capital,” which means that the funds to be given by the government will not be a grant but an increase in capital.

Qatar Airways Chief Executive Officer Akbar al-Baker poses in front of an Airbus A350-1000 at the Eurasia Airshow in the Mediterranean resort city of Antalya, Turkey, on April 25, 2018. (Reuters)

Earlier in March, Al Baker said Qatar Airways will report a “very large loss” because of a regional political dispute that has slapped restrictions on the airline.

The projected losses that Qatar Airways will record for the first time since its history comes after a long period of continued profits.

Until very recently, Qatar Airways did not make public its profits or financial results since it is a private company owned by the Qatari government. However, in 2016, it announced its financial statements for the fiscal year of 2015-2016, which showed a jump in its net operating profit by 328% during that year.

It also recorded a net profit of 1.6 billion Qatari Riyals or the equivalent of $439 million in 2015-2016, which is higher than its records for the fiscal year 2014-2015 amounting to 374 million Qatari Riyals or $103 million.

Its market liquidity and bank balances increased by 54% in the same year, despite growth in operations and adverse movements in foreign exchange rates.

In this Friday, June 16, 2017 photo, Qatar Airways planes are seen parked at the Hamad International Airport in Doha, Qatar. (AP)

In the last fiscal year 2016-2017, Qatar Airways announced a 22% increase in net profit, while revenues increased by 10.4%. The company's net profit was 1.97 billion Qatari Riyals or the equivalent of $540 million, while revenues amounted to 39.3 billion Qatari Riyals or $10.7 billion.

Despite the fact that Al Baker said that the company will reveal its annual results in April, but to this date while entering the month of June, no figures have been made public.

Bloomberg revealed in a previous report last December that Qatar Airways had suffered a 20% loss in revenues since the boycott began in June 2017. The airline sector took the biggest hit of Qatar's economy.

Qatar Airways also lost 11% of its network of flights that fly over Gulf States boycotting Qatar and other long distance routes, which are a significant source of revenue for Qatar Airways.

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Last Update: Tuesday, 29 May 2018 KSA 23:01 - GMT 20:01
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