09 Jun Qatar Crisis And The Impact On Boeing, Airbus
As part of the Qatar crisis, the emirate has been isolated via land and sea, but also has been banned from flying and landing in Saudi Arabia and flights to and from Bahrain, UAE and Egypt have been suspended. One of the direct problems for Qatar is the fact that while it hosts a very big airline in its Emirate, it hardly has any airspace. Most of the airspace around Qatar is officially airspace of Bahrain. On paper, Qatar still has access to the airspace of Bahrain and UAE since it signed a transit agreement, but in reality, use of the Bahrain airspace is rather limited and Qatar Airways transits to Iranian airspace as soon as possible.
The closing airspace is not a big problem for Qatar Airways. Not being able to overfly Saudi Arabia does add to operation costs of the airline, but the bigger problems is the fact that the airline cannot effectively feed into its Doha hub any longer, because it is no longer allowed to land in neighboring countries. Qatar Airways, more than any airline in the region, flies passengers into its hub to fly them to international destinations from there. Saudi Arabia is an important source to feed the Doha hub; this also became clear when the airline tried to set up a domestic carrier in Saudi Arabia, which it could easily connect to the Doha network.
The airline currently has a fleet of 175 passenger aircraft, but what is more important in this case are the unfilled orders. The airline industry and subsequently the commercial aircraft industry highly depends on not only growth, but compounded growth. With the Qatar crisis, this compounded growth could stall requiring less aircraft.
So, there is a chance that the Qatar crisis will lead to a shallow growth that would force deferrals, but this will only be the case if the Qatar crisis is not solved in due time. With the regional network being crippled with no landing rights in Saudi Arabia, Egypt, UAE and Bahrain, one would expect deferrals for the narrow body fleet.
For Boeing, AeroAnalysis does not see a threat here as it has sold no Boeing 737 aircraft to the Qatari carrier. Qatar Airways signed a letter of intent for the purchase of 60 Boeing 737 MAX aircraft. Qatar Airways will use these aircraft to cater to fleet renewal for airlines in which the company acquired stakes. So as long as Qatar Airways’ ability to invest is not affected that order intention will still stand.
Also for Airbus AeroAnalysis sees little to no problem on the short term. Reason being the fact that Qatar Airways has no intention to take delivery of the Airbus A320neo and is in negotiations with Airbus to convert the order to the bigger A321neo with deliveries starting in 2018.
So, for the narrow body aircraft on order, there is no immediate threat on cancellations and this also holds for the wide body aircraft on order that are used to transport the passengers that are fed into the Doha hub.
In the event of an escalation of the crisis, we will likely see deferrals with Boeing having almost $36B of commercial jet sales exposure to Qatar and $28B for Airbus. Via a sale of fighter jets, Boeing’s exposure to Qatar does increase.
The full article on the Qatar crisis can be read here.