Due to the COVID-19 pandemic, various airlines have been tackling the issue of decreased passenger demand, and thereby, minuscule revenue generation, in different ways. While most global airlines are tightening bootstraps in an attempt to weather this storm, Qatar Airways, on the other hand, is taking a much more aggressive approach.
Despite having its own problems due to the commercial aviation shutdown in the middle east, the Chief Executive of Qatar Airways, Akbar Al Baker, has stated that its cargo operations will sustain the airline enough for it to support the struggling flag bearer of Hong Kong, Cathay Pacific, if the need arises. Qatar Airways already holds a 9.99% stake in Cathay Pacific, and is the third largest share holder, behind Swire Pacific and Air China. Qatar had also previously stated that it was interested in increasing its share in Cathay, however, public shares being limited, the offer could not materialise.
Akbar Al Baker, in a report, stated:
‘Cathay is a well-established company and as a shareholder, if Cathay Pacific were to approach us for an equity injection, we will definitely support them.’
Cathay Pacific has already raised $703mn by leasing and selling six Boeing 777 aircraft. However, the airline has been expressing concern about the state of its liquidity, given the fact that global air travel restrictions continue, without any foreseeable end.
Qatar Airways has suffered substantially in this pandemic too. On the bright side, however, there has been a dramatic increase in freight and cargo flights. The airline believes that cargo operations will be responsible for a majority of its revenue for at least eighteen months to come. While Qatar is operating over a hundred cargo flights daily, it must be noted that a quarter of these are to or from mainland China. With that vision, having a significant stake in an airline that has a ginormous cargo network in and around China, such as Cathay, shall extensively help Qatar Airways.
Qatar has acquired stakes in other global airlines too, adding a 25.1 percent stake in IAG (company which owns British Airways), a 5 percent stake in China Southern Airlines, and a 10 percent stake in South American carrier ‘Latam’. Thus, having a strong base in East Asia will definitely help Qatar to strengthen its global network.
This move, if materialised, shall not only help Qatar Airways to coordinate better with Cathay to increase its freight revenue (by utilising Cathay’s extensive cargo network), but it shall also help Cathay Pacific get back on its feet. More details about this deal, if at all Cathay accepts the offer, are yet to be released.
What do you think about this motive of Qatar Airways? Will the association between Cathay and Qatar be symbiotic? Let us know in the comments!