Qatar Airways reported a near ten-fold increase in annual losses as higher fuel costs and a weaker regional economy compounded an already tough operating environment from Saudi-led airspace closures.
The loss for the 12 months through March swelled to 2.33 billion riyals ($637 million) as currency fluctuations and the increased kerosene bill led costs to outstrip an advance in revenue, the company said in a statement Wednesday.
Chief Executive Akbar Al Baker said the figures were disappointing, but that the company faces challenges “unparalleled in the airline industry” from what he called an illegal blockade of Qatari airspace that had led to a cull of profitable routes. He said the carrier still added new destinations in the 12 months, lifted passenger numbers and made its cargo business the largest in the world.
Qatar Airways isn’t alone in its woes among top Gulf carriers. Dubai’s Emirates Group suffered a 44% earnings drop to a seven-year low in the year through March, prompting the world’s biggest long-haul airline to begin a strategy review. Eithad Airways of Abu Dhabi has accumulated losses of $4.8 billion in three years after over-expanding and investing in weaker foreign operators.
Barred from overflying Saudi Arabia and three other countries amid a spat over Qatar’s links with Iran, the Doha-based carrier has had to abandon more than 20 routes and make lengthy diversions in order to continue others, further enlarging its fuel bill.
The embargo led Qatar Air to suspend plans to add destinations in West and Central Africa and South America, according to the statement. “Sustainability indicators were also negatively impacted by the illegal blockade as fuel consumption increased due to airspace restrictions,” the company said.
Adding to its troubles are wobbling demand and a faltering global economy amid a trade war between the U.S. and China, while ratcheting tensions between the White House and Iran threaten further upheaval.