Qatar Airways reported massive profits — but big trouble is lurking on the horizon

pulse

June 12, 2017 6:22 PM

Qatar Airways profits up 22% to $538 million.

CEO of Qatar Airways Akbar Al Baker visits the Dubai Airshow

Qatar Airways' profits soared nearly 22% during the last fiscal year, the airline announced in a financial report on Sunday.

However, the future for the Doba-based airline may be much less bountiful amid the economic blockade instituted by Qatar's Persian Gulf neighbors.

For Qatar Airways, this means the airline will have to go through the expensive process of rerouting its Africa-bound flights to avoid the Arabian Peninsula. In addition, Saudi Arabia and the 50 or daily flights to and from the country represent Qatar Airways' largest market. The scale and economic importance of the airline's UAE operation are not far behind that of Saudi Arabia.

Further, Qatar Airways will have to contend with the overall slowdown in growth experienced by all three Persian Gulf mega-carriers. In May, Dubai, UAE-based Emirates reported that its profits had fallen 82% over the past year.

Much of the headwinds confronting the Middle Eastern powerhouses come in the form of economic and political instability rooted in lower oil prices as well as Brexit and the travel policies instituted by the Trump Administration.

However, the embattled CEO remains defiant. Al Baker told CNN that losing access to its neighbors is simply an opportunity for Qatar Airways to serve the markets it didn't have the bandwidth to cover in the past.

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