Qatar Air Sounds Defiant Note Over Sanctions, Vows Expansion

(Bloomberg) -- Qatar Airways Chief Executive Officer Akbar Al Baker struck a defiant tone in the face of the continued sanctions against his country, calling them a “challenge to civilization” that has only strengthened his resolve to push for more growth and add destinations.

Speaking at the annual tourism fair in Berlin, Al Baker blasted the measures as an assault on his nation, saying “we're not a grocery shop, we're a sovereign country.” Rather than curb growth last year, the embargo had the opposite effect, the CEO said as he announced higher frequencies to places like Barcelona and Madrid and a new twice-daily service to London Gatwick.

At the same time the restrictions imposed by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt last June will push Qatar Air to a “very large loss” for the year ending April 1, the CEO said, adding that the carrier will need to find new streams of financing to survive since it has no access to the equivalent of U.S. Chapter 11 bankruptcy protection. That might include an equity injection, something the government is prepared for, he said.

“We don't know how long it will last,” Al Baker told Bloomberg Television at the ITB Berlin event. “As long as it is required we will have to take the losses. We have to be prepared for the worst.”

Rising Costs

Qatar Air has had to scrap short-haul routes it once flew to the states that imposed the embargo amid claims its home nation funded Islamist terrorism. Swapping to longer routes using wide-body aircraft is driving up costs and at some point the company will seek to recoup its losses, Al Baker said.

The Persian Gulf carrier is also being denied entry to airspace over the countries, causing diversions that extend flying times and add to the fuel bill. Now in its 20th year of existence, Qatar Air has one of the world's most modern fleets that includes the first Airbus SE A350-1000 to enter service earlier this year.

As part of its global strategy, Qatar Air has invested in other major carriers, taking a 20 percent stake in British Airways parent IAG SA and major holdings in Cathay Pacific Airways Ltd. and Latam Airlines Group SA.

Al Baker is also taking a bet on Italy -- where flag-carrier Alitalia SpA is vulnerable after filing for insolvency -- taking a 49 percent position in Meridiana Fly SpA, which was last month renamed Air Italy. The fleet will be beefed up with 30 Boeing Co. 787-8s from Qatar Air once the Gulf operator takes delivery of the larger -9 variant of the Dreamliner, the CEO said.

In India, where it is going through the final legal requirements for gaining a so-called air operator's certificate, setting up a dedicated business remains the plan, though bureaucratic hurdles remain, Al Baker said. Qatar Air also wants to take a stake is Royal Air Maroc, though the carrier is not quite ready for such an investment, he said.

In addition to Gatwick, where flights start in May, other destinations to be added this year include Luxembourg, Malta, and Lisbon, while cities in Vietnam and the Philippines will get higher frequencies. A delayed route to Las Vegas will take time to launch because the Boeing 777-200LR earmarked are being outfitted with Qatar's new Qsuite business-class seats.

--With assistance from Matthew Miller

To contact the reporter on this story: Benedikt Kammel in Berlin at bkammel@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Christopher Jasper

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