Qatar Airways Seeks Ways to Cut Costs as Iran War Halts Flights

Qatar Airways planes parked at John F. Kennedy International Airport in New York. Photo by Michael Nagle /Photographer: Michael Nagle/Bloo

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(Bloomberg) — Qatar Airways is looking for ways to preserve cash amid the continued partial grounding of its fleet.

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The state-owned carrier has contacted several aircraft lessors to potentially defer or reduce rental payments, citing the ongoing war and the impact that airspace closures have had on the airline’s operations, according to people familiar with the matter. The company has already announced that it will pull out of some events in response to the disruptions. 

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Qatar Airways, the region’s second-largest operator behind Emirates, has had to cancel thousands of flights since the end of February and is the most impacted airline by number of suspended flights, according to data from Flightradar24. 

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The country, home to the regional headquarters for the US Central Command about 30 miles from the main airport, has been more cautious ramping up operations than Emirates or Etihad Airways in Abu Dhabi, which have both gradually rebuilt their services, albeit at lower rates and occupancy.

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A portion of the airline’s fleet is still out of position, and the carrier has placed about 20 of its biggest aircraft, including the Airbus SE doubledecker A380 and Boeing Co. 787 jets, in storage outside of Qatar in places like Spain’s Teruel facility.

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Qatar Airways declined to comment. Hamad International Airport, from where Qatar Airways operates, said last week that it’s withdrawing from exhibitions, conferences and awards events in response to the war. 

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The savings push underscores the pressure on an airline that’s built its brand and reputation on luxury, from sleek aircraft cabins to opulent lounges at its main airport in Doha and lavish sponsorships of sporting events like Formula 1. 

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The conflict is also the first major challenge for Qatar Airways’ new chief executive officer, Hamad Ali Al‑Khater, who’s only been in his role for a few months. Al-Khater has to manage the fallout from dislocated planes and crews, unprecedented airspace closures, and the cost of maintaining a global business at a time of greatly diminished commercial operations. 

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Other airlines in the region, including Bahrain’s Gulf Air and low-cost carriers flydubai and Air Arabia are also running internal checks to identify areas where they can cut costs and conserve cash as the companies lose out on millions in revenue on a daily basis, according to others familiar with the matter who asked not to be identified discussing internal matters, and a document seen by Bloomberg News. 

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Given the relatively early days in the conflict, lessors aren’t yet willing to waive payments as demand for aircraft elsewhere remains high, and the leasing companies can move aircraft elsewhere, some of the people said. 

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Gulf Air said it’s adopting a “balanced strategy centered on network optimization, improved operational efficiency and the utilization of alternative revenue streams” that include charter services, while flydubai said it’s navigating the situation. Air Arabia didn’t respond to a request for comment.