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Qatar’s national carrier has dropped plans to buy four A350s over apparent delivery delays, manufacturer Airbus has confirmed.

Qatar Airways still has an order in for several dozen of the aircraft, which are worth some $311 million apiece at list price.

But its CEO has been complaining for months about handover delays and how they’ve been slowing down the airline’s growth.

Qatar Airways/Flickr

Qatar Airways CEO Akbar Al Baker

In March, Akbar Al Baker said:

“I have to scream at Airbus to get my planes faster. I am nearly eight destinations behind schedule because of delays in aircraft deliveries. I hope this will be resolved during this year.”

However, when asked yesterday about whether the airline had canceled any orders, Al Baker simply said, “They (Airbus) have all our orders. They only need to deliver them to us.”

Gulf dispute

Still, an Airbus spokesperson told Reuters this week:

“We confirm that Qatar Airways has cancelled four of their contractual A350 delivery slots” due to “known supply chain issues.”

The undelivered jets “will be reallocated,” the spokesperson added.

Qatar Airways/Flickr

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It is unclear why Al Baker didn’t confirm the cancelation.

The news comes at a time when Qatar Airways has grounded more than two dozen flights indefinitely.

This is because last month, Saudi Arabia, the UAE, Bahrain and Egypt closed their airspace to Qatar for political reasons.

With no end to the dispute in sight, one theory is that the canceled order could be a cost-saving measure.

“All the Gulf carriers realize they have ordered too many wide-bodied aircraft and don’t have room for them, especially now,” an aircraft finance industry official told Reuters.

Thoughts?

Mwani

Hamad Port

Qatar now pays 10 times as much money to import food and medicine into the country due to the blockade, the state’s foreign minister has said.

Speaking in London this week, Sheikh Mohammed bin Abdulrahman Al Thani added that the government has been footing the bill to keep “extra costs” down for residents.

This is because “Qatar has the resources to do that,” he said while speaking about the Gulf crisis at the Royal Institute of International Affairs (Chatham House).

Chatham House

Qatar’s Foreign Minister speaking at Chatham House in London, July 5 2017

According to Al Thani:

“Qatar is paying 10 times extra costs for shipping, from government funds because there are funds available for that. But if Qatar was not in the same level of income, it wouldn’t be able to cover the needs of its own people for medicine and food.”

Protracted conflict

It’s been more than a month since Saudi Arabia, Bahrain and the UAE cut economic ties with Qatar for political reasons.

The conflict shows no sign of ending, and the US State Department even warned yesterday that escalation was imminent.

Financially speaking, this is not great news for Qatar, which before the crisis had been slashing budgets amid lower global oil prices.

But the country has the highest Gross Domestic Product per capita in the world ($127,660).

Mohammed Zuber Shaikh/Flickr

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And some analysts have said Qatar is likely to be able to ride out an economic embargo from its neighbors for months or even years.

Qataris are certainly confident of this. Yesterday, Reuters quoted a local banker as saying, “The only thing that can really hurt us is if they block the gas exports, but then you provoke a crisis in the world.”

The unnamed official added:

“The economy will suffer, but not to the point that we Qataris will suffer. Instead of having five maids at home, we’ll have three.”

QNA

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Qatar’s ability to hold out for a long time is a view shared by Michael Stephens, head of the Qatar chapter of the Royal United Services Institute for Defense and Security Studies.

However, he also told Doha News that the conflict is continuing to harm the whole region.

“This isn’t a win-lose scenario in my view,” he said. Rather, “the entire Gulf suffers from a lack of confidence in stability. This notion that Dubai and Saudi are unaffected is people putting their heads in the sand.”

Lost confidence

Qatar isn’t escaping from the dispute unscathed, either.

This week, ratings agency Moody’s cut Qatar’s credit outlook from “stable” to “negative” over concerns about a protracted Gulf dispute.

However, it did maintain Qatar’s high long-term issuer rating of Aa3.

Omar Chatriwala / Doha News

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In a statement, Moody’s explained:

“The likelihood of a prolonged period of uncertainty extending into 2018 has increased and a quick resolution of the dispute is unlikely over the next few months, which carries the risk that Qatar’s sovereign credit fundamentals could be negatively affected.”

Last month, Qatar’s long-term rating was lowered by S&P Global Ratings and put on negative watch. And Fitch Ratings said it was also considering cutting the country’s score.

The uncertainty of the economic impact on Qatar has also prompted some banks and currency exchanges abroad to stop buying Qatari riyals in recent weeks.

Reem Saad / Doha News

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Other areas that Qatar could be hurt by the blockade include a loss of tourism from its usual Gulf visitors.

Travel restrictions are also affecting the profitability of Qatar Airways, as well as businesses such as international consultancies.

“Moody’s thinks that a prolonged period of uncertainty will negatively affect business and foreign investor sentiment and could also weigh on the government’s long-term diversification plans to position the country as a hub for air traffic, tourism, medical services, education, and sports through a higher risk perception among foreign investors,” the agency said.

However, Qatar’s position is helped by its high level of wealth and assets, as well as its extensive hydrocarbon resources.

Thoughts?

Qatar Airways

Qatar Airways offered laptops for loan to premium passengers during the ban

A ban on bringing larger electronic items onboard some Qatar Airways flights has been scrapped, more than three months after it was introduced.

In a statement, the airline said restrictions on carrying items like laptops and iPads onboard direct flights to the US had been lifted “with immediate effect.”

It added that the carrier and Hamad International Airport have both met all of the US Department of Homeland Security’s (DHS) new security guidelines.

MOI

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DHS has not explained what these new measures entail.

But CNN said they include “greater scrutiny of passengers entering the US, enhanced screening of electronic devices and better deployment of canines that detect explosives.”

The lifting of the ban is a spot of good news for Qatar Airways. The carrier has seen many of its flights grounded amid an ongoing Gulf dispute.

Qatar Airways/Flickr

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“We would like to express our thanks to the US and local authorities for their support during this process,” the airline said.

Doha is the fourth of the affected cities to have the US-imposed restrictions removed.

Abu Dhabi’s Etihad saw its ban lifted on Tuesday, while Emirates and Turkish Airlines both announced they had met new security requirements yesterday.

Laptop ban

The so-called “laptop ban” was introduced without warning in March.

At the time, DHS expressed concerns that terrorist groups were looking for ways to attack aircraft, including smuggling explosive devices in electronics.

In response, the US restricted carrying of larger electronic items on direct flights from several Arab cities.

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Saudi Arabian Airlines has said that it hopes to be flying restriction-free by July 19.

But for now, the ban remain in place on direct flights from Riyadh and Jeddah to the US, as well as Cairo, Amman, Kuwait City and Casablanca.

Thoughts?