Middle Eastern airlines are stockpiling aircraft parts to ease tariff pain
Qatar Airways said it can withstand the shocks from higher tariffs thanks to its stockpile of aircraft spares that might otherwise be harder to source.
The company has built up sufficient inventory, and while there will likely be an impact on air-freight goods stemming from higher import charges, Qatar Airways will 'absorb and adapt with any changes', chief executive officer Badr Al-Meer said in an interview in Doha, Qatar.
Passenger demand is also sufficiently robust to keep ticket prices steady, he said.
'If I tell you tariffs are not impacting us, I will not be honest with you,' Al-Meer told Bloomberg TV. 'Of course, it will have an impact on our supply chain ... on our cargo operation.'
The CEO's comments underpin the tough situation that airlines and planemakers face after US president Donald Trump unveiled tariffs with most of the country's trading partners. Airlines are already grappling with higher prices for spare parts and face the spectre of tariffs on new aircraft.
Travel demand is meanwhile weakening in the US and elsewhere, as passengers absorb the financial hit in the form of rising consumer prices and slumping stock portfolios.
Al-Meer said the airline continues to enjoy strong sales on its US routes despite the uncertainty stoked by Trump's policies, with the trend set to continue in coming months. That sentiment has been echoed by Emirates, the world's largest long-haul airline, which also said that it has not experienced a slowdown.
Conversely, carriers including Virgin Atlantic Airways have said that they've noticed some drop-off on routes across the Atlantic. American Airlines recently withdrew its full-year earnings outlook, saying that unease about the economy is making it difficult to forecast how the year will play out.
Al-Meer said that even if costs rise for Qatar Airways, it won't pass these on in the form of higher ticket prices to customers. The carrier already faces additional costs due to a diverse fleet that includes both Boeing and Airbus aircraft, adding complexity in areas like maintenance or training.
Al-Meer hinted at a possible focus on just the Airbus A320-family aircraft for the single-aisle fleet, meaning that the Boeing 737 planes on lease would be phased out.
Bloomberg reported in December that the airline was considering dropping a Boeing narrowbody order that it had placed at a time when it was stuck in a dispute with Airbus that briefly deprived it of its A320 purchase agreement.
Now that the airline has mended ties with the European planemaker, it plans to focus on one type of narrowbody, and Al-Meer said 'you know where our narrowbody strategy is going' as he pointed to the existing order of almost 60 A321neos from Airbus.
The carrier is also working on a large widebody purchase that it plans to announce in coming weeks, according to the CEO. The deal would further solidify the Middle East as a major source of business for the two planemakers, as airlines expand and renew their fleets and locations like how Saudi Arabia spends billions to transform into tourism destinations.
Qatar Airways is now the second-largest airline in the region behind Emirates, and the company has built its long-range fleet around the Boeing 777 and 787 models, as well as the Airbus A350 and older A330 aircraft. The airline has also ordered Boeing's new 777X model, though that aircraft is long-delayed and won't enter service with Qatar before next year.
Given the delay, Qatar plans to put its upgraded Q-Suite business-class suite on board its A350s rather than wait for the Boeing planes to arrive, Al-Meer said. It's a strategy also deployed by other carriers that have touched up the cabins of existing aircraft to make up for the wait for new planes. – Bloomberg
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