Qatar Airways Receives $2bn From Its Government

Middle Eastern carrier Qatar Airways has suffered dramatically from the global health crisis like many other airlines around the world. The carrier, however, has been doing better than most, running flights throughout the pandemic at the request of national governments for the purposes of repatriating their citizens. However, this has not been enough to keep the airline profitable, and the Government of the State of Qatar will need to help its national airline through the issuance of $2bn worth of shares.

Qatar Airways
Qatar could come back from the crisis a smaller airline. Photo: Getty Images

“Qatar Airways is familiar with facing exceptional challenges; however, 2019-20 has been one of the most difficult years in the airline’s history,” -Qatar Airways via Al Jazeera

Not only has the airline had to deal with the pandemic, but since 2017, it has suffered from a blockade dealt by several Middle Eastern states, thereby restricting the airspace that its aircraft can travel through.

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Consolidated financial statements

Released on September 24th, 2020, Qatar Airways’ consolidated financial statements provide a snapshot of how the airline has been affected by the pandemic. While the document indicates the company’s position as of March 2020, it also contains developments as recent as September 24th – the date that the company issued shares to the Government of the State of Qatar.

In fact, in the report, it states the following:

“At 31 March 2020, the Group’s accumulated losses exceeded 50% of the share capital [requiring an Extraordinary General Assembly meeting] to be called to consider dissolution of the company before duration or decrease the share capital or otherwise.”

It goes on to say that Qatar Airways has issued 730 million shares “of nominal value of QR 10 per share to the Government of the State of Qatar” – QAR 10 is 10 Qatari Riyals – equivalent to $2.75.

It notes that “the shareholder” – in this case, the Qatari government – has provided an advance of 7.3 billion Qatari Riyals to the company. This equates to just under $2bn.

Qatar Airways A350 Getty
The airline has been assisting governments with repatriation flights during the worst of the pandemic. Photo: Getty Images

Could have been better than 2019

While the carrier has had to deal with the consequences of a three-year-long blockade, its CEO made comments last year saying that its business was stronger than ever despite the actions taken by its middle eastern neighbors. In fact, last year’s financials had shown that revenue grew by 14% – strong results from an airline that has to fly ‘the long way around’ countries like Saudi Arabia, Bahrain, and the UAE.

In fact, CEO Akbar al-Baker told Al Jazeera that “If not for the exceptional circumstances of fiscal year 2020, our results would have been better than the year before.”

The report, covering up until March 31st, 2020, notes that over the 12 months, revenue increased 6.5% to 51.1 billion riyals ($14bn), seat capacity increased by 3.2%, while freight handled rose by 2.8%.

Qatar Airways A380
Qatar Airways isn’t planning to fly the A380 in the next year. Photo: Getty Images

It’s interesting that even though the state of Qatar wholly owns Qatar Airways Group, it is issuing shares to the government. To us, this seems like a very roundabout and indirect method of stating that money was granted to the carrier.

What do you think of this bailout? Is it enough to see the carrier through this crisis? Let us know your thoughts in the comments.