Qatar Airways announced a loss of 2.3 billion Qatari riyals (US$632 million) for the fiscal year ended March 31, for a -4.8% margin. That’s their second straight year of losses and ten times the loss of the prior year.
The airline basically gets a pass on its financial performance while the country is being blockaded by Saudi Arabia, the UAE, Bahrain, and Egypt. That eliminates travel to 20 destinations in the region, and forces the airline to take circuitous flight routes – increasing fuel costs and flight times (and making the carrier’s schedules less desirable for customers).
Some critics will seize on losses as proof of subsidy and an unsustainable business model (although subsidies aren’t prohibited under the U.S. – Qatar Open Skies treaty). However it’s worth remembering that airlines have historically lost money and U.S. airlines in particular have lost huge sums (including shifting those losses onto counterparties).
- U.S. airline losses from the grounding of the Boeing 737 MAX are greater than Qatar’s losses.
- According to President Robert Isom, American Airlines may have lost “hundreds of millions” flying between Chicago and China.
- The U.S. airline industry lost $7.7 billion in 2001 during economic recession and from the aftermath of 9/11. The 2010 closure of European airspace due to the Icelandic volcanic eruption cost U.S. carriers $2 billion.
- United, Delta, American, and US Airways (twice) all went through bankruptcy.
- When Delta defaulted on its pilot pensions they had a $3 billion shortfall. US Airways offloaded four pensions worth $2.8 billion onto the federal Pension Benefit Guaranty Corporation. The pensions United walked away from were underfunded by $10 billion.
The economics of Qatar Airways are complicated by their stakes in LATAM, IAG (parent of British Airways, Iberia, Aer Lingus and Vueling), Cathay Pacific and China Southern, as well as the various non-airline businesses they’re involved in.