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Qatar Air faces annual loss amid Saudi blockade: CE Al Baker

QATAR Airways Ltd, which recently announced that it has bought a 9.6 per cent share in Hong Kong's Cathay Pacific for US$661 million, is likely to post an annual loss after a Saudi-led blockade of its home nation forced the airline to cancel some routes and divert others, Chief Executive Officer Akbar Al Baker said.

The second-biggest Persian Gulf carrier is working on substituting the 20 or so lost flights for roughly the same number of viable new routes and should then return to profitability, Mr Al Baker said in a recent interview in Singapore adding that it's too early to predict how big the loss will be. Net income at the Doha-based group rose 22 per cent to QAR1.97 billion (US$525 million) in the year through March.

The CEO explained that all told, Qatar Air has lost almost 11 per cent of its network and 20 per cent of revenue, he added.

The blockade has led to the scrapping of several short-haul flights, while many intercontinental services have been rerouted because of airspace closures, making flying times less competitive and increasing fuel burn.

Mr Al Baker has previously insisted that the measures against Qatar have had a minimal impact on his company. He continued to strike a defiant tone over the embargo, saying that the Gulf state will "stand up" to the pressure and "not sacrifice our sovereignty and our dignity," while calling on President Donald Trump to intervene on behalf of one of the US's "main allies in the region."

Qatar Air was snubbed by American Airlines Group Inc after bidding for a stake in the US giant earlier this year.

Commenting on the Cathay Pacific deal, Mr Al Akbar told Bloomberg that Qatar Air won't seek a seat on Cathay's board, in line with its approach after investing in British Airways owner IAG SA and Latam Airlines Group SA, the biggest South American carrier, but aims to pursue opportunities for joint purchasing in areas such as ground handling, maintenance, components and fuel. The companies are also likely to code-share on flights beyond their Dubai and Hong Kong hubs.

The Gulf carrier doesn't plan to buy any stake in another airline in Asia after acquiring Cathay shares, Mr Al Baker said. "We wanted a strong airline and we already have it in Cathay," he said.

Prior to the blockade, Qatar Airways had been expanding at break-neck speed along with Gulf rivals Emirates of Dubai and Abu Dhabi-based Etihad Airways PJSC, all of them establishing huge transfer hubs at a natural crossroads for global travel.

The carrier's sales surged 10 per cent to QAR38.9 billion in fiscal 2017 as it added 10 destinations and carried 32 million passengers, up from 26.6 million a year earlier. Following the airspace curbs, Qatari flights have been restricted to north- and east-bound routes via Iran and Kuwait. That's been hugely disruptive for services to Africa and has lengthened trips to parts of Europe and across the Atlantic.