Antinori explains how the Gulf carrier that kept flying through the pandemic built its network back to about 100 destinations.

This interview is part of Air Transport Month, a detailed examination of the future of the air transport industry as we begin to climb out of the COVID-19 crisis.

 

Here is a rush transcript of our interview with Thierry Antinori:

Kurt Hofmann:        Hello everyone. And welcome to another interview of our Aviation Week Network as part of the ATW Leadership Forum. My name is Kurt Hofmann. I'm a correspondent for ATW. And today I have the great pleasure to talk to the CCO of Qatar Airways, Thierry Antinori in Doha. Thierry, thank you for your time and welcome.

Thierry Antinori:     Hello, greetings from Doha, best greetings.

Kurt Hofmann:       Thank you, Thierry. Thierry, Qatar Airways was one of the few airlines actually was operating all the time during the pandemic. From your perspective, you're based in Doha and now Qatar Airways is flying again to all continents in the world again, around 100 destinations. From your point of view, overlooking your market, which kind of markets at the moment are very challenging? How is the network performing in times of a pandemic?

Thierry Antinori:     It's a very good question. We should take maybe one or two days to answer it because it's very complex and it change almost every day. The pandemic has been declared by WHO on March 11. That's like more than seven months now. So we are different phase. And as you mentioned, Kurt, Qatar Airways and His Excellency Akbar Al Baker decided to fly continuously during the pandemic for mainly three reasons. The first reason, our mission, to fulfill our mission because our mission is to fly people and to be there also in difficult times, not only when the sun is shining and it was obviously a need there. The second reason is that we are operationally a very resilient company. We learned that through the blockade and so we are not afraid to take our responsibilities and we have a very strong record in quality, in precision, in resilience, operations wise.

                               And so some countries and some airport, we are still open. So it's better to continue to operate. And it enable us now to rebound faster than the competition because our engine was never cold. So as each per week, because the horizon was changing every week. Every week you have new countries opening, countries closing, new needs in the markets. You had firstly needs of family or tour operators or trade agencies that wanted to repatriate their customers, their tourist customers. After you had some people moving repatriation from ships or from mining companies. And at Qatar Airways we have been mixing our network with a lot of charters through that. And because of that, we have been in a position, as you mentioned, observe quite well because we are the real data on the warm engine. And because of that, in addition with a fleet of mainly Airbus A350 and

Kurt Hofmann:        Hello everyone. And welcome to another interview of our Aviation Week Network as part of the ATW Leadership Forum. My name is Kurt Hofmann. I'm a correspondent for ATW. And today I have the great pleasure to talk to the CCO of Qatar Airways, Thierry Antinori in Doha. Thierry, thank you for your time and welcome.

Thierry Antinori:     Hello, greetings from Doha, best greetings.

Kurt Hofmann:        Thank you, Thierry. Thierry, Qatar Airways was one of the few airlines actually was operating all the time during the pandemic. From your perspective, you're based in Doha and now Qatar Airways is flying again to all continents in the world again, around 100 destinations. From your point of view, overlooking your market, which kind of markets at the moment are very challenging? How is the network performing in times of a pandemic?

Thierry Antinori:     It's a very good question. We should take maybe one or two days to answer it because it's very complex and it change almost every day. The pandemic has been declared by WHO on March 11. That's like more than seven months now. So we are different phase. And as you mentioned, Kurt, Qatar Airways and His Excellency Akbar Al Baker decided to fly continuously during the pandemic for mainly three reasons. The first reason, our mission, to fulfill our mission because our mission is to fly people and to be there also in difficult times, not only when the sun is shining and it was obviously a need there. The second reason is that we are operationally a very resilient company. We learned that through the blockade and so we are not afraid to take our responsibilities and we have a very strong record in quality, in precision, in resilience, operations wise.

                               And so some countries and some airport, we are still open. So it's better to continue to operate. And it enable us now to rebound faster than the competition because our engine was never cold. So as each per week, because the horizon was changing every week. Every week you have new countries opening, countries closing, new needs in the markets. You had firstly needs of family or tour operators or trade agencies that wanted to repatriate their customers, their tourist customers. After you had some people moving repatriation from ships or from mining companies. And at Qatar Airways we have been mixing our network with a lot of charters through that. And because of that, we have been in a position, as you mentioned, observe quite well because we are the real data on the warm engine. And because of that, in addition with a fleet of mainly Airbus A350 and Boeing 787. That's why a fleet that is more adapted than the big four engine aircraft during this period.

                               We have been able to scale up our network and to reach today 100 destinations and to plan till 120 or 125 till the end of 2021. And how it will work it depends a lot on the demand and a lot on the regulation imposed by the countries. So we will adapt to that. The demand is quite flat to be very honest. We do not see November more demand than in October for our segment with a connecting six freedom, the long haul, but we are adapting. And what is important is the equation. Cargo is very important because today the business model is not anymore to, to, to, to follow the KPIs of before the crisis, during the crisis, you have to fly and the cash generation positive versus you direct operating costs to, to sweetens the bidder and the very negative invoice on the fixed cost.

                               And we have been quite successful at data so finding the flows where you can cover your costs, who can't go, and the A350 and 787 are very good aircraft, good operating cost and good cargo capacity. And taking on the top, some passengers flows are very key. So two days a markets and the market moved. During the first months of the crisis, it has been a lot of Australia business back to Europe for us. And so movements between America and Middle East. And after that, it changed. And the market we are more Pakistan and Iraq and also the extended region Iran. And now you begin to see some light rebounds on some other segments from Europe, but it's changing every week.

Kurt Hofmann:        So that means-

Thierry Antinori:     So it's about agility, agility with your fleet, mainly for us A350 and 787. Agility with no terms imposed by the country and the airports. So adapting to that fast, faster than the other. Staying in touch with the trade and the big, big agility internally between the cargo division and the passenger division.

Kurt Hofmann:        So Qatar Airways has to be very, very flexible. Did your airline learn actually, the blockade with the neighboring states such like Saudi Arabia and so on, did your airline learn from this kind of blockade with challenging airline operations? Which helps today maybe?

Thierry Antinori:      Yes, of course, of course. The blockade has been in the meantime confirmed legally last July the International Court of Justice as an illegal blockade imposed to the state of Qatar by some neighboring countries. So it's not good news because it's an illegal blockade damaging our airlines somehow. But the paradox though is that this blockade made Qatar Airways more resilient than ever. Because overnight in June 2017, as this blockade was imposed and many observers from this country were thinking Qatar Airways would collapse within one week.

                               Qatar Airways lost 18 destinations overnight, 18 destination, and very important destination for the network of the company. And a lot of source market, including UAE and Saudi Arabia being the biggest source market in GCC. Before the COVID, so in February 2020, so less than three years after these illegal blockade, Qatar Airways opened certified new points in the meantime, compensating or overcompensating these 18 lost points. And Qatar Airways grew also. Qatar Airways has been in the last two financial years, the only Middle East airline that has grown in passenger. Last financial year, 2019, we grow by a double digit number of passenger. And it has been not the case of our two main competitors. That's why... And this blockade helped us to be very, very resilient commercially and to believe in ourselves.

                               And Akbar Al Baker, our boss also continue to differentiate Qatar Airways who network expansion like the other I would say, but investing in quality. And we became again, in 2019 for the fifth time in Skytrax, the best airline in the world. It mean Qatar Airways improved, is operational resilience, the esprit de corps between the management team, what is also a big factor around Akbar Al Baker here. And I've been able to stress even more quality.

                               So before the COVID, we have been the best airline in the world regarding quality, including our Qsuite, HIA airport et cetera. During the COVID it was about to be the more reliable airline because we have been there, the others were not. Now in the second phase of COVID is to be the most predictable airline in the rebound with our network powered by our fleet. And back to our very, very key core DNA of our group CO, quality, differentiation to quality, that's why we continue to invest in the product. So it's a very interesting things. And some of the resized we used and Akbar Al Baker used to manage the crisis has been things we developed positively because of the reaction we have to do to the illegal blockade

Kurt Hofmann:        In the last financial year, you had around 32.4 million passengers, that's quite a lot. But also Qatar Airways made a loss of 1.9 billion US dollars. Well, every airlines in these days is making losses. Operating a strong network line like you have now strategically and with flat load factors, but this is always a long term investment for people to have confidence traveling with Qatar Airways. Can we say so, is this a longterm strategy? And where should cut the, I always Qatar Airways look in the future? How you will see this airline?

Thierry Antinori:     Yes, it's a bit of everything, as you mentioned. But back to the losses last financial year. Our losses has been high, but as we have been already communicating, of course, the core business had been put under pressure by the blockade, the illegal blockade. And I may remember that now in the meantime since this blockade has been confirmed as an illegal blockade by the International Court of Justice last July, we have a court case against the countries, as Qatar Airways against the countries that impose a blockade to the state of Qatar. And we are in the sum of 5 billion US dollar damage is on the table. That's why it's also you can see the impact of the blockade in the last three years. In addition, we... In addition, sorry, I've been distracted by... In addition, we had less financial year. Some changing in some accounting methods that also had a big impact. And we had also a write-off for Italy.

                               So it means the loss is big, is driven by the market condition and the blockade. But Qatar Airways continue to grow on the contrary of other airlines in the region and continue to invest in quality and to differentiate. Now this year with the management we have of the COVID, we are taking a lot higher market shares by generating positive cash versus our direct operating costs. So we will publish at a certain time or numbers, but our numbers we may probably positively surprise versus the rest of the industry. And I think what is important is also commercial teams that we have partly redesigned with a lot more focus on some segmentation and market aspects and also some adjustment in the revenue management, revenue optimization. We will be able also to ameliorate, to improve the revenue quality we have and to extract more from the superb and unique quality of Qatar Airways on the ground at HIA and onboard our plane.

                               So it's an investment, but it's also a very solid investment because we have excellent fundamentals. We have a very, very adapted fleet, and we just got three more A350s. So now we have the largest fleet again in the world of Airbus 350. We have a large fleet of 787. We have the product as a Qsuite, also unique in the industry. We have HIA, the best airport in Middle East five years in a row and third best airport in the world. We have a lot of marketing attention schools, the fact that Qatar will hold the FIFA 2022. We have His Excellencey Akbar Al Baker now in charge of the tourism in Qatar. So it means after COVID, the country will re-open with another drive also to position as a touristic destination.

                               And Qatar is beautiful, we have really, very nice... It's a small country in the geography, in the superficie but you have a very good things to do here. So, it's an investment in the future, but believe me, it will be a profitable investment. We are working on it very hard and I am very determined and quite optimistic that we will get it.

Kurt Hofmann:        Yeah, well, as we see a lot of overcapacity in the Gulf actually like there's Emirates around, there is Etihad and some other carriers. Now we have a different scenario in terms of the Corona pandemic. With your experience, and you are now so many years now in aviation business. What's your view for the Gulf region in terms of overcapacity?

Thierry Antinori:     I say in general, in general I would say the pandemic is lasting and will last so I think that it's not beyond us, you're absolutely right. And I think the question you're asking will be even more crucial in the next three months than in the past three months because some companies could resist a couple of months as some cash reserves a couple of months, but now it's a moment of truth. So it's about to generate cash for your cargo and your passenger or revenue and not to expose your company with too many cost generated by your fleet.

                               We at Qatar Airways we think that we can definitely take a higher share of the smaller pie. We do not know how small the pie will be in the next month. It will be small, and it will be smaller than last year. It will be probably for November, approximately the same size and October, who was not better than September. December we'll see what the European tourist will do. But at this stage, we do not see any signals. And for us, it's about taking your higher share of the smaller pie and being there before the users, or at the same times as the user but with more frequencies because the 787 and the A350 enables that.

                               That's why we grounded our A380 fleet because it's not only economical difficult decision to accept the losses today on these aircraft, because it's too big for the passenger flow, is not efficient enough for the cargo and also not good for the environment. Sustainability is important for us at Qatar Airways. That's why we will be there with more frequencies and more points than the other. And we will see and adapt and navigate further out of the COVID. And of course today if you summarize and add all the capacities from all the airline in the world and Middle East is not an exception, you have a lot of capacities and too many capacities that are partly on the ground.

                               But at Qatar Airways with all the ingredients, the official resilience, the HIA airport, the Boeing safety record we have, the fleet we have, the team we have, the stable leadership we have, and last but not least our partnerships with Key Airline, we are one world member, we are a shareholder of AIG. We have a strong partnership with American Airlines. We are shareholder of Cathay, Pacific and LATAM. We will continue to take shares I would say.

Kurt Hofmann:        Yeah. And how important, final question, is to be a member in an alliance, Oneworld? Is it still in times like this, where the airline scenario is completely changing actually, are trans ventures more important than alliance memberships?

Thierry Antinori:     It's a very good question Kurt. Our group CEO, Mr. Al Becker is regularly asking the same questions as you. So next time you meet him, ask him.

Kurt Hofmann:        Thank you Thierry, CCO of Qatar Airways in Doha. Thank you very much for your time. Talking to us to our aviation week network, ATW leadership forum. All the best to you, to Doha and hope we meet soon again.

Thierry Antinori:      Thank you and we are all waiting for you in Doha after the pandemic is over.

Kurt Hofmann:        Yeah, the whole world.

Thierry Antinori:      You are welcome.

Kurt Hofmann:        Thank you very much, Thierry. Ladies and gentlemen, stay in touch for another interview with us and looking forward to see you again. Thank you and bye-bye.

Thierry Antinori:      Bye bye everybody.