Reuters/Berlin
Any stock market flotation of Qatar Airways has been pushed back by several years due to wider economic turmoil, the chief executive of the state’s flag carrier said.
Al-Baker: ‘I think quite a few airlines will go belly-up in Europe and some other parts of the world
“I do not think it will be any closer than five to eight years,” Akbar al-Baker said at the ITB Berlin travel fair.
Qatar Airways indicated late in 2010 it was planning an initial public offering in early 2012 after three consecutive years of profit.
Last June, al-Baker had said the carrier could seek a stock market listing by the end of 2011.
The IPO “will be postponed for a long time because we feel it will take a long time to recover from the economic situation that the world is in,” he said yesterday.
Al-Baker told journalists yesterday the IPO plan would have been to list 50% of the company’s shares, but limit foreign ownership of stock to 20-25%.
He said profit would slump at the airline in the financial year to end-March, with revenue hurt to the tune of almost $490mn from the Arab Spring uprisings and $515mn from high fuel prices.
“But we will still have our nose above the water,” he said, adding he expected revenue of $6bn, up from $5.1bn the previous year.
Al-Baker said in June the airline made net profit of $205mn for 2009/10 and more than $230mn in 2010/2011.
The airline industry has seen several insolvencies this year, such as Spanair in Spain and Malev in Hungary. Al-Baker said more would follow.
“I think quite a few airlines will go belly-up in Europe and some other parts of the world,” he said, adding Gulf carriers were unlikely to fall into that category.
After buying 35% of all-freight airline Cargolux last year, al-Baker said he would be keen to take more stakes in cargo companies, but was not looking at present because of a downturn in the freight market.
He also expressed confidence that Airbus and Boeing would resolve a series of high-profile glitches but warned against further production delays.
The endorsements from the top industry figure will come as a relief to both aircraft makers as they count the cost of recent mishaps.
Al-Baker said it was normal for new aircraft such as the Airbus A380 superjumbo and the Boeing 787 Dreamliner to have teething problems and stressed safety was not an issue.
He also seemed satisfied with Boeing’s production plans for its new 787 Dreamliner, although many analysts have described the company’s plans to boost production to 10 aircraft a month by end-2013 from 2.5 now as optimistic.
“The 787 will be a very good airplane. I am confident,” al-Baker said at the Berlin trade show on Wednesday.
“I cannot discuss the details, but I can tell you that they have a very achievable ramp-up strategy,” he said after being briefed on the plans for record wide-body aircraft production.
Boeing is grappling with a problem of de-lamination or the separation of bonded layers in part of the composite structure of its lightweight Dreamliner, while Airbus is wrestling with a series of cracks on components inside the wings of its A380 superjumbo.
“I think they will solve the problems with the A380. It is not a big issue ... it is an aircraft that is in its infancy,” said al-Baker.
Analysts say Airbus parent Eads may take a charge of some 100mn euros for the cost of repairing the cracks and Airbus CEO Tom Enders has told staff the A380’s reputation is at stake and that no costs will be spared to resolve this.
Qatar is due to receive its first of 30 787s in June and its first A380 in 2013. With plans to unveil the 787 at the Farnborough air show in July, including lavish seats and entertainment consoles previewed on Wednesday, Al Baker said he would not accept any more delays to the 787, which is about 3 years late.
He also warned Airbus against extending a six-month delay for the first variant of its future A350, the European company’s answer to the Dreamliner. Qatar now expects to receive the first of 80 planes in mid-2014 instead of late 2013.
He repeated criticism of Airbus designs for the largest type of A350 – the 370-passenger A350-1000 due in 2017, which has also failed to impress other Gulf carriers – but said the designers had time to come up with improvements.
Airbus and Boeing are involved in a tug of war over the direction of the lucrative ‘mini-jumbo’ market, which is so far dominated by the still fast-selling Boeing 777. Airbus says its plane will replace the 777-300ER but al-Baker rejected this.
He said he was “satisfied” with proposals for a new 777 presented in confidential briefings. Boeing has said it will decide what to do in this part of the market later this year.
In a boost for Airbus, however, Qatar threw its weight behind the aircraft maker’s latest project by expressing interest in converting up to 20 of its A330 passenger jets into freighters.
Al-Baker had previously threatened to buy converted Boeing 767 aircraft because of a gap in Airbus’s cargo strategy.
The plans would involve giving a second life hauling cargo to mid-sized passenger jets. Qatar operates six freighters but is not interested in buying new ones because the economics are not right, so it prefers to convert jetliners, al-Baker said.
Al-Baker insists he is defending the interests of an airline which is in the throes of dramatic expansion alongside others in the Gulf.
“When I need to criticise them (Airbus and Boeing) to wake them up I will and when they are doing things correctly, I should also give them credit,” he said.
“I am known to be outspoken but I am also known to be fair. I am not on anyone’s payroll and I am looking at everything from the point of view of Qatar Airways.”
He also played down speculation that Qatar Airways would buy airlines in financial difficulties in Europe and said it had shelved plans to buy the new CSeries being developed by Canada’s Bombardier, but had “not written the CSeries off”.