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Comparative Financial Statement Analysis
According to official reports from the Internet and all additional data, the cost per ASK, revenue per RPK, break-even load, and employee productivity on average were calculated, considering the number of personnel. The relevant data are shown in Tables 1, and 2 and the formulas used are indicated for accuracy as well.
Table 1. Raw Data for the Financial Year
Table 2. Comparison of Qatar Airways and Etihad Airways
PESTE and SWOT Analysis
Tools Identification and Adoption
Modern financial analysis methods include convenient and mandatory tools for every developing business in the form of SWOT and PESTE. When used together, they can complement each other, allowing for a systematic and thorough evaluation of an organisation, strategy, or project while considering a variety of factors and indicators (Omer, 2019, p. 57). It is worth noting that the dual approach of using both of these tools allows the formation of an understanding of both internal and external influences, capabilities, and capacities. These types of analysis eventually allow one to make the best decisions regarding the further steps in the development of the firm and its strategy, to categorise the actual and available opportunities, and competently promote the implementation of innovations in the business process (Puyt et al., 2020). Identifying areas in which the organisation can have a competitive advantage at the time of the analysis also makes these tools indispensable.
SWOT tool involves considering strengths and weaknesses in the context of internal factors. Opportunities and possible threats are considered in a broader context (Omer, 2019, p. 56). It should be noted that, in general, this type of analysis is not limited to specific subdivisions into internal and external factors. However, for this studys convenience, this format of categorisation was chosen. PESTE focuses on the assessment of the business environment, including the analysis of social, economic, technological, political, and ecologic sustainability elements of such environment in formulating goals and determining strategies for the course of action (Ellis, 2020, p. 218). In the context of this paper, it is essential because it forms a picture of the external factors affecting the airline.
Qatar Airways External Operating Environment
PESTE Analysis
The study and evaluation of the environment in which the airline operates are made on an orderly basis. The political environment and influencing factors are assessed first: Qatar Airways is the national and primary operator of the country, and it is under complete government control. The development of the company, the creation of strategies, the opening of new routes, and overall control are under the control of the government. Internationally, the airline is considered one of the best in the world and the Middle East (Aquilina-Spagnol, Ellis and Pagliari, 2020, p. 323). International aviation agencies confirm the airlines high level of quality service in standard and premium class on all of its more than 90 foreign destinations (Qatar Airways Group, 2021). The growth and development show the strong political will of the countrys government, which runs the company. However, it is unable to influence external restrictions imposed in other countries because of Covid-19, and such measures are a political factor (Akhter et al., 2022). Despite the gradual removal of such restrictions later, they have dealt a significant amount of harm to company revenues and expenses during the pandemic.
Economic factors affecting the operating environment include both external and internal criteria. In terms of domestic position, because of its status, the airline has a significant advantage and is supported by the state. In terms of external economic evaluation, the positivity of the environment is emphasised by high-profit levels, positive feedback from passengers, and leadership in the global market. Expanding the number of destinations and flights while increasing the fleet in the long run works to improve the airlines profitability (Hamad Fetais, 2021). The speed with which the airline is recovering from the pandemic indicates economic sustainability and growth, despite a short-term decline in overall profits.
The social factors that affect Qatar Airways business are also tightly linked to the state, whose government owns the company. Thus, factors affecting society within the country also affect the operating environment of the national flagship. The gender ratio, cultural development and diversity, religious beliefs, or demographics can be listed among such criteria (Mohandoss and Muthuraman, 2019, p. 26). It is worth noting that most of them have a positive influence on the sustainability of the airline. With a small population, the countrys GDP per capita is very high, which implies a high average income and a predisposition to spend on travel or accelerated travel. The ancient culture respected in society and the spiritual qualities adopted by the airline are reflected in the prevalent mindset, strengthening the reputation of the company. A country leader respected by the people in the position of the owner and the headquarters in the capital can guarantee the social support of the company (Petcu, 2021). Despite a shrinking social base of potential customers during the pandemic, the company is quite successful in regaining its position in parallel to the lifting of restrictions.
Technological factors include the safety, comfort, and innovation of the technical facilities used by the airline. As a technology-dependent industry, aviation requires constantly updating of the technical base, which Qatar is more than capable of doing (Aquilina-Spagnol, Ellis and Pagliari, 2020, p. 325). At the same time as improving these qualities, the airline seeks to reduce costs through the use of innovative developments and the introduction of new technical processes (Restellini, 2022). Increasing financial performance, customer numbers, and government funding are this developments ultimate goals.
Environmental factors, or environmental factors, refer to the companys attitude toward climate change issues and compliance in its operations. Qatar Airways has been criticised for its high carbon emissions level, as have many other large companies of this kind (Ackers and Adebayo, 2022). However, the airline has significantly reduced emission levels, even as the number of flights has increased (Öztürk, Tetik and Demirci, 2022, p. 27). The environmental protection initiative is taken into account by the company as one of the conditions for maintaining its reputation and demand for services at a high level.
SWOT Analysis
In the process of assessing the strengths and weaknesses of the airline, its opportunities, and threats to its business, the results and trends of 2021 were taken into account. With the help of earlier calculations, it is possible to most adequately assess the speed of the companys development and response to market changes for force majeure reasons (Hasoh et al., 2021; Table 2). With a closer look, it is possible to highlight and pay attention to problems or advantages in the context of the micro and macro environment when considering the current and future features of the company.
Qatar Airways Internal Capabilities
The main strengths are the companys size, capabilities, and stable financing. More than 150 destinations in almost 100 countries and a large fleet of modern aircraft with constant technical support, equipment, and upgrades represent an excellent base for development (Petcu, 2021). The high quality of service, especially in the different divisions of the premium and VIP segments, is appreciated by customers and rating organisations alike. The price level in this context is both a strength and a weakness, as the airline rates its services above the global average (Qatar Airways Group, 2021). However, with Qatars high standard of living and high GDP, most citizens are able to pay for this kind of service.
As a state-run and state-funded airline, Qatar Airways clearly has no problems with financing. The country is rich in oil and tourism, which supports the strength of the organisations economic sustainability. Another strength is the cooperation with the worlds major airlines through membership in Oneworld (Aquilina-Spagnol, Ellis and Pagliari, 2020, p. 327). This type of relationship with other aviation conglomerates provides the basis for future growth and operational development.
However, some of the positives have negatives as well, demonstrating the connection of weaknesses to strengths as two sides of the same issue. Thus, the support of the government reflects the complete dependence of the airline on the internal and foreign policy of the state. Thus, if there are no goals set from above or if there is a mismatch of interests, the companys growth and development may be suspended, slowed down, or brought to stagnation (Petcu, 2021). In a similar format, the negative aspect of incomplete and non-transparent financial reporting due to cultural practices and the companys affiliation with the ruling dynasty can also be highlighted. Accurate financial analysis by third-party means is complicated for this reason (Zhao, Liu and Xue, 2019, p. 60). Not all historical financial indicators are publicly available on the Internet and do not always correspond to reality.
The cost of services is likewise a weak point of the airline. With a smaller population, the airlines primary focus should be on foreign travellers, not all of whom can afford tickets of such cost (Aquilina-Spagnol, Ellis and Pagliari, 2020). In addition, dependence on international customers can put the organisation at a disadvantage, which contributed significantly to the financial losses during the pandemic period (Akhter et al., 2022). Thus, the expansion and increase in destinations and distances also exacerbate the weakness of the airline because of this increased dependence on the rising cost of asset maintenance.
Furthermore, among the weaknesses of the company is a certain fall in reputation due to the organisations sexist policies. The CEO voiced one of these, and the worlds perception reacted negatively to such actions (Hotten, 2018). Moreover, some sources mention a lack of morality among the companys employees (Stevenson and Marintseva, 2019). This is happening due to the fact that the organisational department of human resources uses inadequate methods in management and implements stringent rules and high fines for employees. Thus, employee attrition, retention, retraining, and initial coaching become a problem, causing additional expense and effort.
Qatar Airways Key Issues: Opportunities and Threats
Among the companys opportunities and threats, it is necessary to identify and analyse some of the most specific problems for this particular company. To begin with, one can look at the airlines opportunities, some of which it is already using successfully and some of which are the focus of future use. The potential growth in popularity of the airlines services, caused by the FIFA World Cup in Qatar, is at a reasonably high potential level (Qatar Airways Group, 2022). By beginning to focus on the championship in advance, the airline has ensured a sufficient level of investment, marketing, quality, and service availability for arriving and departing tourists. Many, even customers who had not used Qatar Airways before, were pleasantly surprised by the abundance and filling of packages, especially in the premium segment. A marketing case of such type can signal a substantial expansion of the customer base, plus increased public awareness of the airline (Chiambaretto and Wassmer, 2019). The predicted increase in popularity for the same reason is in the development of the company and is taken into account by its competitors.
Forming alliances with other airlines can help to increase the profitability of the organisation and improve its position in the market. The current level of contracts and common developments in terms of charging, sharing fleets, and other partnerships should be significantly enhanced and expanded to meet business growth goals (Calicchio, 2020; Wood, 2022). Thus, another potential opportunity can be identified, which implies the companys application of a business strategy that includes active brand promotion and expansion into other markets. Opening its own representative offices and introducing additional flights in another part of the planet can, with the right approach and control, provide an increase in return on investment, profitability, and efficiency of business processes.
Some developed and developing economies tend to have an increased focus and need for luxury travel and transportation. Examples of such countries include Singapore, India, China, and others actively increasing their financial sustainability and the standard of living of their citizens. With Qatar Airways wide range of premium services, concentrating on growing economies can be an excellent grounding for the companys future (Wood, 2022). Separate seats on the plane up to the provision of cabins, an operating restaurant, and even in-flight shower service can satisfy even the most discerning travellers. Such an opportunity cannot be missed with the high level of competition from, for example, Emirates or Etihad.
However, the high risks and potential problems specific to the region and to Qatar Airways should not be forgotten:
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Rising fuel prices are affecting many airlines, even from countries that have their own oil developments. According to some views, further increases in fuel prices have the potential to cause a second recession in the industry. The reason for this is not only an increase in the cost of the fuel itself but also an increase in the number of kilometres and flights (Tolba, 2022). In addition, the length and range of some routes have increased because of the ban on flights over Russian territory, which was imposed in response to the global sanctions imposed on the aggressor. Although Qatar Airways is not on the list of companies banned from such flights, routes are being built to bypass these territories due to the instability and danger.
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The political and military instability in the region and the countries surrounding Qatar is a severe risk. Multiple terrorist groups fighting or with the potential to commit terrorist attacks threaten not only the airline business but also the lives and well-being of their customers (Albasoos, Hassan and Al Zadjali, 2021). Ensuring security in this context requires additional expenditure and implies maximum attention to flight route planning and scheduling. Thus, while company management tries to address all security threats and countermeasures wherever possible, risks still exist and show an increasing and varied trend.
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New laws relating to restrictions, taxation, and licensing of airlines based on the level of combustion products emitted pose a significant challenge to the industry in general and Qatar Airways in particular. Despite technological innovations designed to reduce emission levels and constant monitoring of this point, there is a risk of backtracking with the trend towards prohibitions and acrimony in such regulations (Öztürk, Tetik and Demirci, 2022). Such a situation, if it occurs, guarantees financial, legal, and organisational problems.
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Increased competition in the region is a constant risk, which is a major issue for any airline in a regional and global context. Such fiercer contests and competition for customers have become particularly noticeable in the context of a significant decrease in their numbers (Akhter et al., 2022). The Covid-19 pandemic and the special rules for travellers that followed, including full lockdowns and bans on visits, came as a shock to many industries. However, the logistics industries are at the top of the list of those affected, and this is especially true in the area of passthrough travel. The losses incurred by the airline in 2020-2021 have made it financially unprofitable to operate even in a year of easing restrictive measures, and this is evident from the companys performance (Tables 1, 2). Qatar Airways is performing impressively in a recovering market, but its main competitors are also recovering. Competitive risk is exceptionally high at the current time and should be given maximum attention when developing the companys strategies for future periods (Petcu, 2021, p. 334). Innovation and development of unique amenities, in parallel with lowering or at least stabilising prices, could contribute to a sufficient level of competitiveness for the company.
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Political disagreements with the Arab bloc could also be a problem for Qatar Airways. Past support for the Muslim Brotherhoods good relations with Iran and political instability in Qatar are such indicators (Albasoos, Hassan and Al Zadjali, 2021, p. 158). Some radio and television channels are banned in the Arab bloc but exist in Qatar. In addition, Iran is one of Saudi Arabias foremost economic, military and ideological rivals in the region. Consequently, Qatar Airways, as an organisation entirely subordinate to the political structure of the state, has risks of getting into trouble in the markets of the Middle East in its main operational space.
Reference List
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