By Jay Singh
Saturday October 10, 2020
Al Baker revealed his thoughts in an interview. Photo: Getty Images
Qatar Airways’ CEO Akbar Al Baker has offered his take on the current state of the aviation world. The airline chief has indicated that he believes carriers are not in the clear yet and will likely need more support from governments. He also extended the comments to cover his own airline.
Not in the clear yet
In comments made to CNBC, Al Baker stated that the “worst was not behind any airline.” He believes that a second wave, which could be worse than the first wave, could lead to other airline collapses or bailouts from countries.As for Qatar Airways himself, CEO Akbar Al Baker stated that he believed losses would continue for the airline. The airline this year posted a massive nearly $2 billion annual loss. The airline did receive $2 billion in support from its government.
Airlines are still in trouble
Look no further than the United States to see that airlines are still in trouble. After receiving billions in support in March and April, airlines have again turned to Congress in an attempt to secure more funding. Thus far, however, those bids have proven unsuccessful.
Most carriers are still burning through significant amounts of cash. Just a few days ago, the IATA released an alarming statistic that, globally, airlines are burning through nearly $300,000 per minute. This will put cash burn globally in the second half of the year at a whopping $77 billion.
Couple this with significant international travel restrictions, international routes, which are lucrative moneymakers for airlines ranging from Qantas to British Airways to United Airlines, and it is clear that airlines are still combating a perfect storm.
Is he right?
In a year from now, we will probably know whether Al Baker was correct or not. For now, it is anyone’s best guess. However, few, if any, airline CEOs from Europe, North America, South America, and others, are projecting a rosy outlook. Most hope that a vaccine will help stabilize some of the losses by bringing confidence to more passengers in flying and opening up more borders.
While airlines cannot let their guard down, the US aviation sector is seeing signs of a rebound. Since about July, passenger numbers have held somewhat constant with ups and downs and, recently, signs that there might be better days ahead.
The comment on his own airline, however, is quite stark. Qatar Airways has significantly outsized exposure to international travel compared to most other airlines globally, meaning that travel restrictions hurt it more than others. While carriers like LATAM, American Airlines, and China Southern can rely on domestic networks for some revenue, Qatar Airways does not have that luxury.
So, it is not unthinkable that Qatar Airways will suffer losses in the next few years without a return of most international travel, but that has not stopped the airline from pursuing growth with new flights to Accra and San Francisco, among others.
Some sectors, such as China, Vietnam, and Russia, thus far have shown signs of a strong rebounding recovery. Vietnam, in particular, had taken very strict actions shutting down international tourism, though the country has recently started opening up international flights.
Time will tell