With Aircraft Grounded, Qatar Seeks Flexibility on New Deliveries

(Bloomberg) --

The head of Qatar Airways called on the world's two major planemakers to ease demands that ailing carriers accept delivery of new aircraft, saying future relationships are at stake.

Airbus SE and Boeing Co. should allow the deferral of handovers until at least 2022, Chief Executive Officer Akbar Al Baker told Bloomberg TV Tuesday. Qatar Airways has about $50 billion of orders outstanding, based on list prices.

“What is important is for Boeing and Airbus to show their customers that they are not only there with them in good times, but also in bad,” he said in the interview. “If they don't oblige, they will permanently lose us as a customer.”

Al Baker's comments highlight the financial pressure on airlines, especially Gulf carriers like Qatar Airways whose business shuttling travelers across the globe has been shriveled by the coronavirus. The CEO said he didn't know when passengers would begin flying again in significant numbers, and that it will take several years for traffic to return to normal.

An Airbus spokesman said the company is in contact with clients but declined to discuss specifics, citing confidentiality. Boeing declined to comment.

Tense Turn

With aviation on life-support, historically close relations between planemakers and airlines that can commit billions of dollars in a single order have taken a tension-filled turn. Carriers are pushing to cancel or postpone deliveries, while the manufacturers, with the added burden of keeping suppliers healthy, are trying to keep payments flowing.

Gulf rival Emirates, the world's largest long-haul airline, said Monday it's unable to commit to outstanding orders. Bloomberg reported last month that the Dubai carrier was seeking to cancel its final five Airbus A380 deliveries.

“We are nowhere near confident enough that the economics, the cash flows, the bottom line will put us in a good position to be able to guess if we'll buy a hundred of this or a hundred of that,” President Tim Clark said in a webinar.

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Toulouse, France-based Airbus and Chicago-based Boeing have cut production to contend with the downturn. The European firm's top executives will meet this week to reassess output, people familiar with the matter have said.

Equity Injection

Al Baker also said Qatar Airways has kept going with its own resources, but that if the crisis continues and a bailout is needed it will likely seek an equity injection from its government owner.

Support may also be forthcoming for airlines which have received substantial investments from Qatar Airways. That includes Latam Airlines Group SA, the largest South American airline, which filed for bankruptcy protection in New York last week.

“Of course we will come to their aid,” Al Baker said. “It's a strategic investment for the long term.”

Carriers around the world have turned to governments for assistance as the pandemic grounds fleets. Deutsche Lufthansa AG, Europe's biggest airline and a major customer of Boeing and Airbus, is working on a 9 billion-euro ($10 billion) bailout from Germany and plans to permanently cut 100 planes.

Al Baker said customers returning to the skies should prepare to wear masks, gloves and even face shields on Qatar Airways flights. But he said leaving empty rows between passengers isn't an option as it would boost ticket prices by at least 100% and be “an absolute disaster for aviation.”