Posts Tagged ‘Akbar Al Baker’

Middle east Tensions Loom Over Dubai Aerospace Pageant

November 10, 2017

BY REUTERS
 NOVEMBER 10, 2017 15:37

 

Preparations for the Dubai Airshow continue amid mounting pressure over the escalation in the Middle East, in particular in Saudi Arabia and in Lebanon.

Middle East tensions loom over Dubai aerospace pageant

Al Fursan, the UAE Air Force performs during Dubai Airshow.. (photo credit:AHMED JADALLAH / REUTERS)

Rising Middle East tensions and a corruption crackdown in Saudi Arabia will cast a shadow over next week’s Dubai Airshow, as military and aerospace leaders try to gauge whether they might prolong a weapons-buying spree in the region.

Fraying business confidence since the summer, when a sudden rift emerged between Arab powers, means the recent rapid growth of major Gulf airlines will also be under scrutiny when the Middle East’s largest industry showcase opens on Sunday.

The biennial gathering has produced a frenzy of deals in the past, especially four years ago when Dubai’s Emirates and Qatar Airways opened the show with a display of unity as they unveiled a headline-grabbing order for passenger jets.

But highlighting the current rift between Qatar and Arab nations including the United Arab Emirates, Qatar Airways’ outspoken chief executive will not be at the show, which has also been overshadowed by political upheaval in Saudi Arabia.

Distrust between Arab Gulf states, on top of escalating tensions between regional arch-rivals Saudi Arabia and Iran, is likely to keep defense spending high on the agenda at the Nov 12-16 event, to be attended by dozens of military delegates.

Saudi Arabia and allies are exploring increases in missile defenses following ballistic missile tests in Iran, which have been heavily criticized by Saudi Arabia and the United States.

Iran views its ballistic missile program as an essential precautionary defense.

“The hot area for the Middle East has been air defense,” said Sash Tusa, aerospace analyst at UK-based Agency Partners.

“While the issue of Iran’s missile tests is new, demand from the Emirates and Saudi Arabia already reflects the fact that they have been at war, in some cases on two fronts, for over two years.”

Saudi Arabia and Iran are facing off in proxy wars in Yemen and Syria. Saudi Arabia, which recently committed to tens of billions of dollars of US equipment, says it has intercepted a missile fired from Yemen over Saudi capital Riyadh.

SAUDI CRACKDOWN

Few defense deals get signed at the show itself, but it is seen as a major opportunity to test the mood of arms buyers and their mainly Western suppliers.

But analysts say the way of doing business is up for discussion after an unprecedented crackdown on corruption in Saudi Arabia that erupted days before the show’s opening.

“The big question on many multinational company minds now … {is} will they will change the way in which decision making works when it comes to purchases of their equipment and services,” said Sorana Parvulescu, partner at Control Risks in Dubai.

Those detained in the crackdown include billionaire Prince Alwaleed bin Talal, whose Kingdom Holding part owns Saudi Arabia’s second biggest airline flynas, and Prince Miteb bin Abdullah, head of the country’s elite internal security forces.

“There will be questions around how does this impact their (foreign firms) model of operations in the country and their market share and their market position,” Parvulescu said.

Airbus and Boeing will be pushing hard for new deals on the civil side of the show at Dubai’s future mega-airport, after a pause for breath at the last edition in 2015. Boeing goes into the event with a wide lead in this year’s order race.

Emirates, the region’s biggest carrier, is expected to finalize an additional order for Airbus A380s, which if secured could be crucial to extending the costly superjumbo program.

After years of expansion, some analysts are questioning the viability of the Gulf hub model, which has seen three airlines, Emirates, Etihad Airways, and Qatar Airways, emerge as some of the world’s most influential after taking advantage of their geographic location of connecting east and west.

Leasing executives have also raised doubts over whether the Big Three will take delivery of all of the more than 500 wide-body jets currently on order from Airbus and Boeing.

In September, Middle Eastern carriers saw their slowest rate of international demand growth in over eight years.

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Qatar Buys a Chinese Ally Against Gulf Bullies

November 6, 2017
A stake in Cathay Pacific hands CEO Akbar Al Baker several advantages.
Bloomberg
By David Fickling
PHOTOGRAPHER: FAYEZ NURELDINE/GETTY IMAGES

The world’s most richly valued major airline is suddenly looking a little less shiny.

Cathay Pacific Airways Ltd., whose 9.5 times enterprise value-to-Ebitda multiple is almost double that of Singapore Airlines Ltd. despite a forecast HK$1.3 billion ($167 million) loss this year, is losing a key shareholder.

 Image result for qatar airways president, photos
Qatar Airways CEO, Akbar Al Baker

Affiliates of Kingboard Chemical Holdings Ltd. sold their 9.6 percent stake to Qatar Airways Ltd. for HK$5.16 billion, according to a filing Monday. That’s a large change for an illiquid stock: Only 15 percent of Cathay’s equity is freely traded, with Swire Group and Air China Ltd. having 45 percent and 30 percent interests respectively. The shares that do trade fell as much as 4.9 percent in Hong Kong, headed for their worst performance in six months.

One obvious reason for the drop is that Cathay’s valuation, and Kingboard’s strategic stake, were both seen as bets not so much on the company’s financial performance as the odds of Air China buying out Swire in a bid for complete control. Such a deal would allow state-owned Air China to create the world’s largest cargo carrier and build Cathay into a premium global brand, Corinne Png, an analyst at Crucial Perspective in Singapore, has argued. It would also fit a pattern of Beijing gradually tightening its control over Hong Kong, both politically and — with recent deals such as Cosco Shipping Corp.’s takeover of Orient Overseas International Ltd. — in business terms.

Cathay shares have done rather well since Kingboard’s affiliates first declared a holding last December, gaining 25 percent, of which 17 percent was in the past month alone. An airline stake never made a lot of sense for a maker of circuit-board laminates, but Kingboard’s HK$800 million gain isn’t to be sniffed at.

More tantalizing is the question of Qatar Airways’ motivation. The carriers first struck a two-way relationship in 2014 with the announcement of twin daily flights between Hong Kong and Doha, although Qatar seems markedly more keen on the arrangement: When the congenitally aloof Cathay dropped its routes last year, the Gulf partner was so eager to keep up access into China that it matched the dropped flights on its own planes.

The stake further extends Qatar Chief Executive Officer Akbar Al Baker’s traction within the Oneworld alliance, where he now has influence with five of 13 members thanks to shares in IAG SA and Latam Airlines Group SA. 1  It may also help consolidate Baker’s presence in air cargo: Cathay and Qatar are, respectively, the fourth- and fifth-biggest cargo carriers, with Emirates at No. 2.

Still, to focus on those issues alone risks missing the wood for the trees. It’s hard to miss the diplomatic ramifications as Qatar heads into its fifth month under blockade by neighboring countries, and as Saudi Arabia arrests senior figures in politics, business and royalty, further consolidating Crown Prince Mohammad bin Salman’s grip on power.

Qatar at present depends on emergency routes negotiated via the UN’s aviation organization ICAO to cross the air traffic control regions that surround the country and are entirely controlled by its rivals Saudi Arabia, Bahrain and the United Arab Emirates. A pivot to Asia makes sense in that context, since most destinations are accessible more or less directly through the friendlier skies of Iran.

More to the point, a seat around the table with Cathay’s Chinese shareholders could buy Baker some powerful allies. Qatar now has something Air China would badly like, in the form of an option on an outright takeover of Cathay Pacific. China, meanwhile, has an outbound tourism market that the UAE’s Emirates (and at some point, even Saudi Arabia itself) might want to tap, not to mention a voracious demand for oil that’s currently seeing the likes of Riyadh lose share to the Russians. If Doha’s enemies push too hard, they risk antagonizing a very powerful ally.

A lesson known in every playground is that when you’re being ganged up on, you need a friend who’s stronger than your bullies. Qatar’s state airline, in sidling up to China, may have done just that.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. The five are IAG-owned British Airways and Iberia, Latam Airlines, Cathay Pacific and Qatar Airways itself.
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Qatar Airways’ CEO Expected Trump To Be “More Shrewd”

Qatar Airways’ CEO Expected Trump To Be “More Shrewd”
June 13
09:352017

MIAMI – The CEO of Qatar Airways, Akbar Al Baker, said he was expecting President Trump to be more “shrewd” after the governments of Saudi Arabia and Egypt stated last week that their airspace, land, and sea borders are closed to any traffic from Qatar.

 

“I’m extremely disappointed in President Trump. I thought he was more shrewd,” Qatar Airways CEO, Akbar Al Baker, told The Wall Street Journal in an interview. “I was expecting that the U.S. will lead the challenge to this blockade.”

Last Friday, the President of the United States, Donald Trump, said, “Qatar, unfortunately, has been a funder of terrorism at a very high level,” and has supported Egypt, Saudi Arabia, Bahrain, and the United Arab Emirates in their actions taken against the Qatari Government.

Qatar’s support for Islamist organizations, including Hamas and an Al Qaeda, as well as its relationship with Iran compared with other Gulf states, are the main reason of the Middle Eastern blockade.

However, Qatar is host to Al Udeid Air Base, which has over 11,000 American military personnel. This armed forces relationship, created during Trump’s visit to the Middle Eastern countries last month, was strategically established to launch airstrikes against the Islamic State.

Considering this, the United States Secretary of State, Rex Tillerson, stated last week, “We certainly would encourage the parties to sit down together and address these differences. If there is any role we can play in terms of helping them addressing those, we believe it is important that the GCC remains unified.”

DIFFICULT TIMES FOR QATAR AIRWAYS?

Al Baker said his company will face “a difficult year,” but remarked that the airline has plans in place to mitigate the damage. “If they think they are going to go laughing to the bank at Qatar’s cost, I think they are mistaken,” he said.

According to the controversial CEO, “Qatar Airways’ focus is on supporting our passengers and ensuring that we continue to deliver our award-winning service. As far as we are concerned, it is business as usual,” he said.

Qatar Airways chartered three flights with competing airline Oman Air to bring stranded passengers in Jeddah, Saudi Arabia, via Muscat. Similarly, additional flights were chartered with Kuwait Airlines via Kuwait.

Al Baker also stated that Qatar Airways isn’t planning on slowing down the airline’s customary expansion, keeping new airplanes joining the fleet and opening up new destinations. However, at the moment, 18 Qatar Airways destinations are out of bound because of the traffic restriction.

https://airwaysmag.com/airlines/qatars-national-airline-ceo-i-thought-trump-would-be-more-shrewd/

New Jets Threaten Airbus and Boeing Duopoly

July 16, 2017

Competitors from China, Russia and Canada are moving into the so-called single-aisle air market

Commercial Aircraft Corp of China, known as Comac, introduced its first C919 passenger jet at a press conference in Shanghai in November 2015.
Commercial Aircraft Corp of China, known as Comac, introduced its first C919 passenger jet at a press conference in Shanghai in November 2015. PHOTO: REUTERS
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July 16, 2017 7:00 a.m. ET

LE BOURGET, France—Boeing Co. and Airbus SE suddenly have competition.

For nearly two decades, the two have had the global market for big commercial jets largely to themselves. That is all changing, with three new competitors—from China, Russia and Canada—rolling out their own entrees into the so-called single-aisle market.

Orders for these new jets are few for now, and the Russian and Chinese makers won’t deliver planes for years. The jury is also still out on how popular they will ever be. Boeing and Airbus, meanwhile, are selling plenty of their own, tried and tested work horses in the category.

Still, if even one of these new competing jets is a hit, it could threaten one of the most lucrative sectors for Boeing and Airbus.

“I don’t have any problem buying Russian or Chinese aircraft,” if a viable model emerges, Akbar Al Baker, chief executive of Qatar Airways, one of the world’s biggest jet buyers, said recently.

The sudden competition is unfamiliar for both jet makers, and it adds pressure on them as they face waning demand in other markets. Bigger, long-haul jets aren’t selling nearly as well as single-aisle, or narrowbody, jets and both Boeing and Airbus have struggled recently with big cost overruns and delays for some of their military programs.

The narrowbody market has been the industry’s sweet spot for years. Big airlines and fast-growing budget ones love them for their size and fuel efficiency. At the Paris Air Show last month, Boeing introduced the latest and biggest version of its 737 Max, with 230 seats. Boeing has a backlog of more than 3,600 orders for its 737 Max family of jets.

Airbus, meanwhile, has sold more than 5,000 of its A320neo family, the competitor to the 737 Max. It started delivering them to customers last year.

Technicians worked on Comac’s C919 jet in Chengdu, China, in April.
Technicians worked on Comac’s C919 jet in Chengdu, China, in April. PHOTO: LIU KUN/XINHUA/ZUMA PRESS
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Amid that booming market, three new players have swept in. China flew its C919 narrowbody for the first time in early May. The Chinese jet, built by state-owned Commercial Aircraft Corp., known as Comac, has secured more than 500 orders, mainly from Chinese buyers. First delivery is expected around 2020. Comac didn’t respond to requests for comment.

Russia’s MC-21, which can seat up to 211 passengers, also made its maiden voyage in May. It is made by Irkut Corp. , which says it has taken in 175 orders and will deliver its first in 2019 as it prepares for further tests.

Canada’s Bombardier Inc., meanwhile, began delivering a 130-seat version of its CSeries plane in November. The CS300 competes with the smallest models of the Airbus and Boeing’s short-haul planes. It is already in service with two European airlines. Bombardier so far has 237 orders for the jet.

Deutsche Lufthansa AG and Air Baltic executives have praised the plane’s low noise and fuel efficiency.

“The interest level in the program continues to rise,” said Bombardier’s commercial-airplanes boss Fred Cromer.

China and Russia have yet to win backing for their planes from big-name Western carriers. Many of those buyers aren’t convinced the newcomers can in the near term provide the required globally available spare parts and repair services to keep operations humming.

Meanwhile, other plane makers, such as Brazil’s Embraer, have avoided going head-on against Boeing and Airbus and stuck to building smaller airliners.

The Chinese jet may be the most significant threat to Airbus and Boeing. Its ambitions are underpinned by the government’s long-term focus and deep pockets and a domestic airline market large enough to keep local aircraft production humming.

“Are they a threat in the next five to ten years to Airbus and Boeing? Probably not,” said Airbus’s chief plane salesman, John Leahy. “In 20 years, I think they will be one of the big three manufacturers of aircraft.”

China has also been working closely with U.S. and European suppliers. The C919 is powered by engines made by a consortium of General Electric Co. and France’s Safran SA .Honeywell International Inc. and Rockwell Collins Inc. are also partners. Like Boeing and Airbus, the newcomers act as integrators of components made around the world.

The Chinese plane still lags the performance of the newest Boeing and Airbus jetliners. It is projected to have a shorter range and be less fuel efficient. But industry officials believe that will change.

“The Chinese will drastically change the duopoly, but with the next aircraft, not the C919. With this one, they are going to learn,” said Jerome Rein, partner at Boston Consulting Group.

Boeing is moving some work completing aircraft to China to help maintain access to the rapidly expanding market. Airbus already assembles some of its single-aisle planes in Tianjin near Beijing.

“Our team has to wake up every day to be mindful that competition evolves and evolves quickly and we have to stay ahead of it,” said its commercial-airplanes boss, Kevin McAllister.

Bombardier displayed its CS300 passenger jet at the China International Aviation & Aerospace Exhibition in Zhuhai, China, in November, 2016.
Bombardier displayed its CS300 passenger jet at the China International Aviation & Aerospace Exhibition in Zhuhai, China, in November, 2016. PHOTO: QILAI SHEN/BLOOMBERG
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Boeing also has gone after rivals through litigation. The U.S., on Boeing’s behalf, 13 years ago sued the European Union at the World Trade Organization for what it calls unfair European government support for Airbus. The case and a counter-claim, remain underway.

This year, Boeing challenged Bombardier’s sales of a smaller version of the CSeries, the CS100, to Delta Air Lines Inc. at the U.S. International Trade Commission. It accuses the Canadian company of selling the plane below cost.

Bombardier dismisses the accusation, noting that new planes are often heavily discounted. It also said that Boeing has no standing to challenge its deal for the 100-seat plane since the U.S. plane maker has no rival product. The U.S. review is still ongoing.

Write to Robert Wall at robert.wall@wsj.com

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© SPUTNIK/AFP | Russian Prime Minister Dmitry Medvedev in front of the new MC-21 medium-haul jet, which has made a successful test flight, during its roll-out ceremony last June

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Developed: The single-aisle twin-engine jetliner has been designed to go head-to-head with Boeing's 737 and Airbus A320 in the lucrative aviation market

Developed: The single-aisle twin-engine jetliner has been designed to go head-to-head with Boeing’s 737 and Airbus A320 in the lucrative aviation market

Image result for C919, aircraft, photos

Chinese airlines and lessors have bought about 2,000 of these jets, the C919, and will likely buy thousands more, with Boeing forecasting that by 2035 China will spend $1 trillion on new airliners, including over 5,000 single-aisle planes, to satisfy its burgeoning demand for air travel.

Qatar Airways boss says ‘bullying’ Gulf states will harm profits

July 13, 2017

AFP

© AFP | Qatar Airways chief executive Akbar Al-Baker signs a giant portrait of the Qatari emir during a ceremony to show support for the country and its leader in Doha on July 13, 2017

DOHA (AFP) – Qatar Airways’ outspoken boss Akbar Al-Baker accused neighbouring Gulf states Thursday of “bullying” his country during the region’s political crisis and said his company’s profits would be hit by the dispute.

Baker insisted that Qatar could sustain the impact of what he called a blockade imposed on Doha, but conceded that an impact on profits was inevitable for the Gulf carrier.

“It has to (affect profits) because we have additional costs to operate in and out of the country,” he said.

“And this is normal when you are blockading somebody. They will have additional costs to operate in and out of the region.”

Pressed on how much of an impact there would be, Baker declined to give numbers.

Last month the airline announced profits of $540 million for the financial year to March 2017, a 22 percent increase on the previous 12-month period.

But the airline faces a hit after the June 5 decision by Saudi Arabia, the United Arab Emirates, Bahrain and Egypt to impose sanctions on Qatar, over accusations it supports Islamist extremism and was too close to Iran.

Among the sanctions was a decision to close the airspace of the countries to Qatar Airways.

This means the Doha-based carrier can no longer continue its lucrative services to Dubai and Saudi Arabia, and has to divert some flights on longer routes because of airspace restrictions.

Qatar denies the charges.

Baker said Qatar could endure the crisis for “as long as it is there”.

“All the people have a normal life, all the supplies are available, actually more than what it was before, so what is the problem?

“We need our neighbours to know that this kind of bullying doesn’t work because the people of Qatar are very robust and we have no issue to have our normal life.

“This is a loss for them not for us.”

He was speaking at a ceremony in Doha to show his company’s support for Qatari Emir Sheikh Tamim bin Hamad Al-Thani.

Qatar Airways unveiled the latest in a growing number of huge billboards that have sprung up around Doha depicting a profile of the emir, with the words “Tamim the glory”.

The image has become the symbol of the country’s defiance during the crisis and Qataris and non-Qataris have queued up to sign the boards expressing their support for the government.

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American Airlines Bid Puts Qatar Airways’ Chief in New Role: Raider

June 24, 2017

Akbar Al Baker, the Qatar carrier’s sometimes abrasive CEO, isn’t backing down despite opposition

Image result for Qatar Airways, photos

CEO of Qatar Airways Akbar Al Baker. (AFP/Getty Images)

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June 23, 2017 2:26 p.m. ET

PARIS—When Akbar Al Baker took over management of Qatar Airways 20 years ago, the state-owned carrier flew just four planes and the Persian Gulf country kept a low profile.

Now, with Qatar Airways flying about 200 jets and its host nation a financial and political powerhouse, Mr. Al Baker is shaking up the industry with an unsolicited bid to build a 10% stake in American Airlines Group Inc.

But this target is different from all the others. American CEO Doug Parker called the bid “puzzling and strange” and American’s pilots and flight attendants unions oppose the bid.

The opposition has thrust Mr. Al Baker into an unfamiliar role: corporate raider.

The sometimes combative Qatar Airways chief says he doesn’t want a fight. But he’s not backing down. Qatar is seeking U.S. antitrust approval to buy just under 4.75% of American on the open market. The Mideast carrier said it would only increase that if it won American board approval but would keep only a passive stake.

Other tensions color the attempted transaction.

American accuses Qatar Airways and other Persian Gulf carriers of benefiting unfairly from state backing and is pursuing a subsidy claim. Qatar denies the allegation. Qatar’s Gulf neighbors, meanwhile, recently cut diplomatic and transport links with the country, accusing it of supporting Islamist groups and extremists in the region. Qatar denies those accusations.

Qatar Airways has usually delighted other airlines around the globe when it has taken stakes in them. When Mr. Al Baker began investing in British Airways ’ owner International Consolidated Airlines Group SA—which has now grown into a 20% stake—the move was embraced by the airline. The British government didn’t stand in the way.

Mr. Al Baker holds a reputation for confrontation within the airline industry. He regularly calls out airplane makers for missed deadlines and what he considers quality shortcomings.

Eight years ago at the Paris Air Show, he blasted Boeing executives over problems the plane maker encountered on its new 787 Dreamliner plane. The company, he said, “is being run by bean counters and lawyers.”

Two years later, after an Airbus delay shipping jets, Mr. Al Baker told reporters that “Airbus is still learning how to make airplanes.”

Earlier this month, he took a swipe at President Donald Trump, criticizing him for backing Saudi Arabia in its current political standoff with Qatar. “I thought he was more shrewd,” he told The Wall Street Journal.

Mr. Al Baker serves his bosses in Qatar—the ruling Al-Thani family—in ways beyond his capacity as Qatar Airways’ boss. He sits on the board of Volkswagen AG , for instance, representing the Qatari government’s roughly 17% stake in the auto maker.

Aside from his sometimes abrasive image, Mr. Al Baker is regarded as a pragmatic executive.

“Business is what drives him,” said analyst John Strickland, who has followed Mr. Al Baker’s career for more than a decade.

In response to airspace restrictions imposed by Qatar’s Gulf neighbors, for instance, Mr. Al Baker quickly moved to readjust plans for the airline and pressured international regulators to intervene. He “won’t take things lying down,” said Mr. Strickland.

Qatar Airways declined to make Mr. Al Baker available. A Qatar government spokesperson didn’t have an immediate comment.

Born in 1960, in Doha, Mr. Al Baker studied economics and commerce and joined the country’s civil aviation administration, where he eventually worked in a number of senior posts. In 1997, he was tapped to run fledgling Qatar Airways, at the time a regional carrier.

It now flies to more than 150 far-flung cities, including Houston and Auckland, New Zealand. It has raised its international profile through high-profile sponsorships of the FC Barcelona soccer club and FIFA soccer’s World Cup. Its lavish first- and business-class service has helped win it a prestigious 5 stars in the Skytrax international airline ranking system.

It is difficult to say how costly that has all been. The airline only began publishing audited financial results last year. Earlier this month, it said profit rose 22% to about $540 million for the fiscal year ending March 31. Sales grew about 10% on the year.

U.S. carriers critical of Qatar have said its public financials mask big handouts that helped fuel growth. In a dossier provided to the U.S. government in 2015, the American rivals argue Qatar Airways has received $8.4 billion in government loans and advances that don’t have to be repaid, and another $6.8 billion in loan guarantees. Free land and discounted airport charges represent more than $1 billion in additional state aid, they allege.

Qatar Airways said their rivals’ subsidy definition is inaccurate and, that by that same standard, U.S. airlines received massive state aid through their ability to restructure under chapter 11 bankruptcy protection.

Write to Robert Wall at robert.wall@wsj.com

Appeared in the June 24, 2017, print edition as ‘Move on Rival Puts Airline Boss On ‘Strange’ Path.’

https://www.wsj.com/articles/american-airlines-bid-puts-qatar-airways-chief-in-new-role-raider-1498242390

Qatar ‘extremely comfortable’ despite sanctions, markets stabilize — Iran and Morocco send food

June 13, 2017

Reuters

Tue Jun 13, 2017 | 3:19am EDT

By John Davison and Andrew Torchia | DOHA/DUBAI
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Qatar’s financial markets stabilized on Monday after a week of losses as the government showed it could keep the economy running in the face of sanctions by its neighbors.

The finance minister of the world’s richest country per capita played down the economic toll of the confrontation, and said the government was “extremely comfortable” with its financial position, with the resources to endure the pressure.

Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar a week ago, accusing it of fomenting regional unrest, supporting terrorism and getting too close to Iran, all of which Doha denies.

The biggest diplomatic rift in years among the rich states of the Gulf has disrupted Qatar’s imports of food and other materials and caused some foreign banks to scale back business.

On Monday, it was becoming clear that Qatar could keep the economic damage from becoming critical. Some of its food factories were working extra shifts to process imports from nations outside the Gulf, such as Brazil. Shipping lines have re-routed container traffic via Oman instead of the UAE.

Such measures may involve delays and raise costs for Qatar; on Monday Fitch put Qatar’s AA credit rating on Rating Watch Negative, saying a sustained crisis could hurt its credit outlook. But they are unlikely to prevent the economy from functioning in any fundamental way, economists say.

The diplomatic confrontation has become a major test for the United States, which is closely allied to the countries on both sides. Qatar hosts the Middle East headquarters for U.S. air forces; Bahrain hosts the main base for the U.S. Navy.

Image result for food processing, Qatar, photos

As the world’s leading exporter of liquefied natural gas, Qatar’s wealth has allowed it to crown its small Gulf peninsula with skyscrapers. It has also given the government the means to take an outsized role in regional affairs, sponsoring factions in revolts and civil wars and brokering peace deals across the Middle East. Several neighbors have been furious for years.

“STARVE THE BEAST”

In Washington, U.S. President Donald Trump, who has strongly backed the countries imposing sanctions on Qatar despite a more neutral stance taken by the State Department and Pentagon, said the measures were helping to stop terrorism funding.

A logo of Qatar Airways is seen at Hamad International Airport in Doha, Qatar June 12, 2017. REUTERS/Naseem Zeitoon

“One of the big things that we did and you are seeing it now is Qatar and all of the things that are actually going on in a very positive fashion. We are stopping the funding of terrorism,” he said during a photo call with cabinet officials. “We are going to starve the beast.”

Image may contain: one or more people, indoor and food

Qatari Food companies step in to fill the void.  Workers work in a meat processing plant in Doha, Qatar, June 10, 2017. REUTERS/Naseem Zeitoon

Qatari Foreign Minister Sheikh Abdulrahman al-Thani told a news conference in France that Qatar “still had no clue” why the nations cut ties. He denied that Qatar supported groups like the Muslim Brotherhood that its neighbors oppose, or had warm ties with their enemy Iran.

So far, the measures do not seem to have caused a serious shortages of supplies in shops. Some people have even joked about being “blockaded” inside the world’s richest country: a Twitter page called “Doha under siege” pokes fun at the prospect of readying “escape yachts”, stocking up on caviar and trading Rolex watches for espresso.

But an economic downturn could have more dire consequences for the vast majority of Qatar’s 2.7 million residents, who are not citizens but foreign workers. Migrant laborers make up 90 percent of Qatar’s population, mostly unskilled and dependent on construction projects such as building stadiums for the 2022 soccer World Cup.

In an interview with CNBC television — one of the first public appearances by a Qatari economic policy maker since the crisis erupted — Finance Minister Ali Sherif al-Emadi said the government was “extremely comfortable with our positions, our investments and liquidity in our systems”.

The energy sector and economy are essentially operating as normal and no serious impact has been felt on supplies of food or other goods. Qatar can import goods from Turkey, the Far East or Europe and will respond to the crisis by diversifying its economy even more, he told CNBC.

“Our reserves and investment funds are more than 250 percent of gross domestic product, so I don’t think there is any reason that people need to be concerned about what’s happening or any speculation on the Qatari riyal.”

Jason Tuvey, a Middle East economist at London-based Capital Economics, said that as long as the other Gulf countries did not interfere with Qatar’s gas exports, the tiny state should be able to carry on without a serious recession.

“It seems Qatar would be able to weather quite a prolonged period of sanctions,” he said, adding that economic growth, fueled by government spending and infrastructure projects, was “highly unlikely to grind to halt”.

Qatar, like other Gulf states, has tried to diversify from oil and gas. The sanctions have hurt one of its highest-profile enterprises, fast-growing airline Qatar Airways, which says it has been cut it off from 18 of its destinations.

“It is actually a travesty of civilized behavior to close airline offices. Airlines offices are not political arms,” CEO Akbar Al Baker told CNN. “We were sealed as if it was a criminal organization. We were not allowed to give refunds to our passengers.”

He added that he was “extremely disappointed” in Trump. Washington “should be the leader trying to break this blockade and not sitting and watching what’s going on and putting fuel on (the) fire.”

UNDERPINNED BY WEALTH FUND

Qatar’s riyal currency, pegged at 3.64 to the U.S. dollar, was under pressure last week as banks reacted nervously to the diplomatic rift. On Monday, the currency came off last week’s lows in the spot QAR= and offshore forwards markets QAR1Y=W.

Bankers said the central bank, which has $34.5 billion of net foreign reserves backed by an estimated hundreds of billions of dollars of assets in Doha’s sovereign wealth fund, was supplying enough dollars to keep exchange rates under control.

The cost of insuring Qatar’s sovereign debt against default QAGV5YUSAC=MG fell back for the first time in a week. Yields on Doha’s international bonds XS140578215=TE dropped almost 10 basis points and the stock market .QSI stabilized after sliding 8.7 percent in the past week.

Tuvey said the main threat to the economy was that Qatari banks could find it much harder to obtain wholesale funding from other banks to sustain growth in their loan portfolios. However, if the situation becomes critical, the Qatari government can liquidate some of its overseas assets to fund its banks, as Saudi Arabia did last year when its banks faced a squeeze.

Qatar’s sovereign wealth fund has major stakes in top Western companies such as Credit Suisse (CSGN.S). Asked by CNBC whether it might now sell some of those stakes to raise money, Emadi indicated this was not on the cards for now.

Qatar’s normally bustling border with Saudi Arabia was deserted on Monday. Soldiers in an armored pick-up truck looked out over barbed-wire at sprawling dustland separating Qatar from Saudi Arabia. Indian migrants who work at the border in green uniforms lay on inspection platforms sheltering from the sun.

Normally, thousands of passengers and hundreds of trucks from Saudi Arabia pass through the crossing each day, bringing fruit and vegetables, as well as construction materials.

(Additional reporting by Tom Finn and Ibrahim Saber at the Abu Samra border crossing and Steve Holland in Washington; Editing by Peter Graff and Peter Millership, Larry King)

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Reuters

Tue Jun 13, 2017 | 3:19am EDT

Morocco says will send food to Qatar after Gulf states cut ties

Morocco said it would send plane-loads of food to Qatar to boost supplies there after Gulf Arab states cut diplomatic and economic ties with Doha.

Qatar, which imported 80 percent of its food from bigger Gulf Arab neighbors before the diplomatic shutdown, has also been talking to Iran and Turkey to secure food and water.

“This decision was made in conformity with Islamic precepts that call for solidarity and mutual aid between Muslim people, notably during this holy month of Ramadan,” the Moroccan foreign ministry statement said on Monday.

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain accuse Qatar of supporting militants – an allegation dismissed by Doha.

On Sunday, Morocco said it would remain neutral in the dispute, offering to mediate between the Gulf countries, which are all close allies to the North African kingdom.

Qatar’s finance minister said on Monday the world’s richest country per capita has the resources to endure and played down the economic toll of the confrontation.

(Reporting by Samia Errazzouki; Editing by Patrick Markey and Andrew Heavens)

Related:

Gulf air embargo only applies to Qatari companies, says UAE

June 13, 2017

AFP, France 24 and Reuters

© Frederic Brown, AFP | File photo taken on March 21, 2017 shows a Qatar Airways aircraft coming in for a landing at Los Angeles International Airport.

Text by FRANCE 24

Latest update : 2017-06-13

The air embargo imposed on Qatar only applies to airlines from Qatar or registered there, the United Arab Emirates Civil Aviation Authority said Tuesday.

Saudi Arabia and Bahrain issued identical statements on the air embargo, which came into effect when Riyadh, Abu Dhabi and Manama broke off relations with Qatar on June 5, accusing it of supporting “terrorism”.

The embargo bans “all Qatari aviation companies and aircraft registered in the state of Qatar” from landing or flying through the airspace of the Emirates, Saudi Arabia and Bahrain, according to the statements published by the national agencies of the three countries.

The ban does not apply to aviation companies and aircraft not registered in Qatar and the three neighbouring countries, and even those which wish to cross their airspace to and from Qatar, they said.

The three countries’ aviation bodies also said non-Qatari private and chartered flights from Qatar must submit requests to them at least 24 hours before crossing the airspace.

The request should include a list of names and nationalities of crews and passengers, and the cargo carried by the aircraft, they said.

Qatar asks UN body to rule the ban illegal

On Monday, Qatar Airways called on the UN’s aviation body, the International Civil Aviation Organization, to declare the Gulf boycott illegal and a violation of a 1944 convention on international air transport, also called the Chicago Convention.

Qatar Airways CEO Akbar Al Baker said the move by Saudi Arabia and its allies was an “illegal blockade”.

Saudi Arabia, the United Arab Emirates (UAE) and Bahrain are among several countries which last week announced the suspension of all ties to Qatar, over what they claim is the state’s support for extremist groups and its political proximity to Shiite Iran.

QATAR’S ISOLATION IS A REGIONAL POWER PLAY

Riyadh has insisted that closing its airspace to Qatari flights was within its sovereign rights to protect its citizens from any threat.

Responding to the Qatari appeal, the UAE General Aviation Authority said it is fully committed to the Chicago Convention, but the state reserves the sovereign right under international law to take any precautionary measures to protect its national security if necessary, according to UAE state news agency WAM.

Qatar has denied the allegations and has vowed to fight the air and sea blockades in international forums.

Furthermore, international human rights groups such as Amnesty International and Human Rights Watch have also slammed the Gulf states of Saudi Arabia, Bahrain and the UAE for “toying” with the lives of thousands of ordinary citizens affected by the blockade.

The blockade is widely seen as a way to punish Qatar for its good relations with Tehran, as part of the larger struggle between Saudi Arabia and Iran.

Human rights of potentially thousands of people in Gulf affected by steps imposed after political dispute with Qatar http://amn.st/60108lv6O 

(FRANCE 24 with AFP, REUTERS)

Related:

Saudi Arabia Says Qatar Airspace Closure to Protect Citizens From Threats

June 13, 2017

DUBAI — Saudi Arabia’s aviation body said on Tuesday that closing its airspace to flights from Qatar was within its sovereign rights to protect its citizens from any threat.

The Saudi comments were in reaction to remarks by Qatar Airway’s chief executive that the kingdom, the United Arab Emirates and Bahrain were violating international law by shutting out Qatari flights.

Image result for Qatar Airways, photos

CEO of Qatar Airways Akbar Al Baker. (AFP/Getty Images)

The airspace closure was within its sovereign right to protect the country and its citizens from anything it sees as a threat and as a precautionary measure, Saudi Arabia’s General Authority of Civil Aviation said in a statement published by the Saudi Press Agency.

Similar statements were also issued by the UAE and Bahraini aviation authorities after a CNN interview of Chief Executive of Qatar Airways, Akbar Al Baker, who criticized the three Arab countries for the airspace closure.

Saudi Arabia, the UAE, Bahrain and Egypt cut diplomatic and transport ties with Qatar a week ago, accusing it of fomenting regional unrest, supporting terrorism and getting too close to Iran, all of which Doha denies.

Al Baker had appealed to the International Civil Aviation Organization, a U.N. agency which administers the Chicago convention that guarantees civil overflights to declare the airspace closure as illegal.

The UAE General Aviation Authority said it is fully committed to the Chicago convention, but the state reserves the sovereign right under international law to take any precautionary measures to protect its national security if necessary, according to UAE state news agency WAM.

The three countries’ aviation bodies also said non-Qatari private and chartered flights from Qatar must submit requests to them at least 24 hours before crossing the airspace.

The request should include a list of names and nationalities of crews and passengers, and the cargo carried by the aircraft, they said.

(Reporting by Celine Aswad and Saeed Azhar; Editing by Christian Schmollinger)

Saudi Arabia Revokes License of Qatar Airways, Offices to Close

June 6, 2017

RIYADH — Saudi Arabia’s General Authority of Civil Aviation (GACA) has revoked the license of Qatar Airways and ordered its offices to be closed within 48 hours, the regulatory body said said in a statement.

Any licenses granted to Qatar Airways employees would also be withdrawn, the statement said.

The move comes a day after GACA banned all Qatari planes from landing in the kingdom’s airports, following the worst rift in years among the Gulf countries.

(Reporting by Katie Paul; Writing by Saeed Azhar; Editing by Tom Arnold)

Related:

Image result for Qatar Airways, photos

CEO of Qatar Airways Akbar Al Baker. (AFP/Getty Images)

“We are buying American aeroplanes in big numbers and we are providing jobs. Every single flight we do brings economic benefits to the U.S. So to us, America is first.”

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Qatar Airways’ chief : Militants can get around ban on carrying large electronic items

April 7, 2017

DUBLIN — Militants would be able to get around a ban on carrying large electronic items into the cabins of planes bound for the United States by traveling from cities not impacted by the ban, Qatar Airways’ chief executive was quoted as saying on Friday.

The U.S. introduced security measures on March 25 banning electronic gadgets larger than a mobile phone from passenger cabins on direct flights to the United States from 10 airports in the Middle East, North Africa and Turkey, including Qatar.

“Instead of going from the airports where there is a ban, they will go to airports where there is no ban,” Akbar Al Baker told the Irish Times in an interview.

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“And there are no bans in certain airports that are very risky – I don’t want to name them – but it is far easier to get on to aeroplanes from those places than it is with us.”

Announcement of the restrictions prompted some media speculation it was aimed at protecting U.S. airlines by stifling the growth of the fast-expanding Gulf carriers and Turkish Airlines, a theory dismissed by U.S. officials and many experts.

Gulf airlines Qatar, Emirates and Etihad Airways have been battling a lobbying campaign in Washington by U.S. carriers that accuse them of receiving unfair subsidies, charges that the Gulf carriers deny and which Al Baker dismissed.

“We got equity, not taxpayers’ money, and we were given enough equity for us to be independent, which we are today, and we have to show profit,” he was quoted saying.

Image result for Qatar Airways, photos

CEO of Qatar Airways Akbar Al Baker. (AFP/Getty Images)

“We are buying American aeroplanes in big numbers and we are providing jobs. Every single flight we do brings economic benefits to the U.S. So to us, America is first.”

The newspaper also quoted Al Baker as saying Qatar did not plan to increase its 20 percent stake in British Airways-owner IAG.

(Reporting by Padraic Halpin; Editing by David Holmes)