Qatar Airways spurns Airbus, flirts with Boeing, buys into LATAM

Qatar Airways is having a busy week, as the Gulf-based carrier continues to grab the aviation sector’s attention at the Farnborough Airshow in the U.K. In addition to releasing its financials for the first time in a bid to suppress allegations of opacity and unfair subsidies, the carrier also signed an agreement today to buy up to a 10 percent stake in LATAM. Qatar’s national carrier also announced that it was in “advanced talks” with Boeing to buy up to thirty 737 Max and 737NG aircraft.

The LATAM deal, according to Qatar Airways CEO Akbar Al Baker, would have the airline investing US$613 million in the Latin American carrier, which has been struggling of late due to weak local demand. The Wall Street Journal reported that the deal with LATAM would also include a fresh fundraising round, which Qatar Airways would subscribe to.

Regarding the Boeing deal, the airline’s chief executive insisted that despite negotiations being “advanced,” it was too soon to say whether a deal would be signed at this week’s airshow. “We still have a few things to iron out,” he told Farnborough press.

The decision by Qatar Airways was based largely on the breakdown of its deal with Airbus over delays.  Last month, the airline canceled its order for its first A320neo jetliner from Airbus due to complications that the Wall Street Journal attributed to supply bottlenecks. Al Baker already managed to trigger a spat over the Airbus deal last week that prompted a rare public rebuke from Airbus engine supplier Pratt & Whitney. Al Baker’s comments, the engine maker alleged, were “completely inaccurate” and mischaracterize the performance of the engine,” which, the company argued, meets its fuel-consumption promises.

Qatar Airway’s financial statement for the financial year ending March 2016 revealed that cargo revenue was US$1.53 billion, a substantial 21 percent of the airline’s revenues. Total revenues were $8.87 billion. The release marked the first time the government-owned carrier has disclosed such detailed financial records, however little financial information was provided about Qatar’s cargo operations or airline profits. This decision was taken in an effort to stave off long-standing allegations by U.S. carriers that Qatar Airways has benefitted from unfair government subsidies.

That’s not the case, argued Al Baker. “Our position on this is clear: Qatar Airways is not subsidized,” he asserted.