Australian Aviation — January 2018

H

e is a famously fractious

individual not slow to speak

his mind and even the fact his

airline is heading for a loss

in its current financial year hasn’t

slowed down Qatar Airways chief

executive Akbar al Baker. With Qatar’s

closest neighbours having closed

their skies to his jets, under attack

from US rivals for allegedly profiting

through government subsidies and

facing an unprecedented dip in

fortunes currently hitting all the Gulf

carriers, Qatar has put its foot on the

accelerator.

Al Baker is launching new flights at

breakneck pace, continuing to spend

billions on new aircraft to expand the

fleet and, perhaps most surprisingly

of all, seemingly pushing ahead with

a strategy that cost nearby Abu Dhabi

flag Etihad Airways dearly: investing

in other airlines around the globe. His

latest spend, in November, was to fork

out US$662 million for a 9.61 per cent

stake in Hong Kong’s Cathay Pacific

Airways. This is apparently aimed at

allowing the Qatari carrier to reach

deeper into Asia’s booming traffic

numbers.

“Frankly, I wish I could buy more,”

he declared. “But the Swire Group and

Air China hold most of it and I’m the

third-largest shareholder, which is not

bad.”

Qatar already owns 20 per cent

of International Airlines Group

(IAG), parent of British Airways and

Iberia, 20 per cent of South America’s

LATAM Airlines and 49 per cent of

Italy’s Meridiana, a carrier he says will

overtake Alitalia as Italy’s primary

airline. It had also tried to buy a stake

in American Airlines earlier this year

but was rebuffed.

Many analysts are comparing

Qatar’s moves to the blueprint Etihad

used in its investment strategy

and wonder whether the carrier is

playing with fire. That was a strategy

that floundered and has now been

abandoned by Etihad’s owners in the

face of huge losses. After posting a

US$103 million profit in 2015, Etihad

last year announced a staggering

US$1.87 billion loss, blaming

US$808 million of the deficit on its

financial exposure to partner airlines

such as Air Berlin and Alitalia, which

both went bankrupt.

Al Baker himself is nonplussed,

saying Qatar Airways wants

shareholdings to be exchanged

between itself and its portfolio airlines

as it seeks to become a virtual mega-

carrier.

“I see a lot of synergies we could

bring as a group. I hope that one

day in the not too distant future we

all, these four groups, get together

and exchange shareholdings in each

other so that we will become a real

mega-carrier. That is something

that some people have tried, but not

successfully.”

And there are significant

differences between the investment

moves of Etihad and Qatar. From

the beginning, many questioned the

wisdom of Etihad throwing millions

of dollars at Alitalia, which had been

a basket case for decades, constantly

mired in problems with its unions

and rarely able to make money or

compete effectively with other big

European operators. Airberlin too was

a perpetual loss-maker with ongoing

union issues.

The same can hardly be said of IAG

and British Airways. And although

Cathay is going through a rough

patch – it lost $74 million in its latest

financial year and is cutting hundreds

of jobs in a bid to slash costs as it

struggles to face off rising competition

from mainland Chinese carriers – it

Qatar Airways and Cathay Pacific

are both oneworld alliance

members.ROB FINLAYSON

QATAR AIRWAYS