Airlines face losses or stagnant revenues for 24-36 months says Qatar Airways CEO
Posted on 14 November 2011 with no comments from readers
Global airlines have flown into severe turbulence this year and the continuing fall-out from the eurozone crisis promises a tough 24-36 month period warned Qatar Airways CEO Akbar Al Baker at the Dubai Airshow today.
He said ‘his’ airline would be one of the least affected but that the industry faced at best flat revenues and could have huge losses. Qatar Airways has seen a five per cent drop in revenues he revealed in an interview with CNBC.
$18bn Emirates’ order
Yesterday the Dubai Airshow was stunned by an $18 billion order from Emirates for 50 Boeing 777s (click here) and Qatar Airways is also expected to unveil its purchase plans this week.
But Gulf carriers do a lot of business with Europe and have also been impacted by disruptions from the Arab Spring uprisings this year. Mr Al Baker commented that his airline has the right aircraft to transfer to other routes but this is clearly not always possible.
However, it was a decade ago just after 9/11 that Emirates Airline placed a record $15 billion order for Boeings and 22 A380 superjumbos from Airbus. That has been a success despite the 2008 global financial crisis and its aftermath. Passengers love the A380 which costs 20 per cent less to operate than other aircraft.
Placing big orders during tough times makes sense commercially. You can strike the best deals then, and by the time the planes are actually delivered the demand for the extra capacity is there or you can steal it from other airlines with your superior aircraft.
Legacy losses
This is just not fair on the legacy airlines whose finances are often far more precarious, and they are losing out. That is why Emirates now has the largest long-haul capacity of any airline in the world. Ten years ago the Dubai carrier was well behind.
In the end there has to come a point at which the Gulf carriers over-reach themselves but it has been a long time coming. It is the traveler in the meantime who benefits from lower cost flying in the most modern aircraft.
The losers are the legacy carriers and many will not survive the next 24-36 months. Consolidation is in the air.
