Akbar Al Baker, the chief executive of Qatar Airways says he won’t ever do business with either Boeing or Airbus if they refuse to defer aircraft deliveries worth billions of dollars that the Doha-based airline has on order. Like many airlines, Qatar Airways believes the Corona crisis will result in a continued and significant drop in travel demand for some time to come and a full recovery isn’t expected until 2023 to 2024 – meaning the airline wants to put off deliveries of aircraft it doesn’t need and likely can’t afford.
According to Boeing, Qatar Airways has a total of 88 aircraft still on order with the US manufacturer. Unfilled orders include 60 next-generation 777X which are valued at $422 million each at list value, as well as 23 Dreamliner 787-9’s and 5 freighter 777’s. Outstanding orders with European aerospace giant Airbus include 50 single-aisle A321neo’s and 27 A350-100 aircraft valued at $366 million each.
Generally, airlines and aircraft manufacturers announce the value of orders based on the list price but airlines nearly always receive a massive discount on the published amount. Airbus has even stopped publishing list prices because they don’t reflect the true value of what airlines will actually end up paying.
“We are negotiating with both Boeing and Airbus to fulfil our requirement to defer and we hope that both the manufacturers will oblige,” Akbar Al Baker told Reuters in a telephone interview on Tuesday.
“They have no other alternative to oblige and if they make it difficult to oblige we will keep them in mind and we will not do business with them again,” the often outspoken chief executive continued.
Qatar Airways operates an incredibly varied and diverse aircraft fleet and recently said this would enable it to better weather the COVID-19 storm by deploying the right aircraft type for the demand. The airline’s massive Airbus A380’s, for example, will likely remain grounded for at least a year (and may never return), whereas it’s single-aisle fleet of Airbus A320’s, as well as smaller wide-body aircraft like Boeing 787-8 Dreamliner’s will better match demand.
The question is, what happens if both Airbus and Boeing “make it difficult to oblige” – then what will Baker do? It’s not like there are other aircraft manufacturers waiting in the wings to take Qatar’s money in the future.
Of course, Qatar Airways isn’t alone in wanting to defer or even cancel aircraft orders altogether. Both Airbus and Boeing will be negotiating with airlines around the world over their unfilled orders and there will likely have to be some give and take. Only yesterday, Sir Tim Clark of Dubai-based Emirates said the airline could no longer commit to its massive backorders for new planes like the 777X.
For Baker, though, it’s more a case of where he would put the new planes. Qatar Airways plans to keep at least 20 per cent of its fleet grounded for the foreseeable future doesn’t have the space to take any new deliveries.
