Qatar Airways reported a fiscal year 2018/19 net loss of QAR2.3 billion ($639 million), widened from a net loss of QAR251.6 million in the year-ago period.

The carrier attributed the results to loss of mature routes, higher fuel costs and foreign exchange fluctuations. Its FY2018/19 ended March 31.

The airline said it was challenging year and—while it is disappointing the group registered a loss—the underlying fundamentals of its business remain extremely robust.

Qatar Airways Group CEO Akbar Al Baker said: “2018/19 was a year of achievement in the face of adversity for Qatar Airways. Despite facing challenges that are unparalleled in the airline industry … we have grown our fleet, expanded our network, and seen overall revenue increase 14% to QAR48 billion.”

The carrier is facing the second year of an air space blockade by neighbors that has restricted air routes and driven costs higher. The blockade over Saudi Arabia, the UAE, Bahrain and Egypt has barred the Doha-based oneworld alliance member from flying over the territory. As a result, the airline’s fuel costs increased 36% to QAR18.1 billion from QAR13.3 billion year-over-year (YOY) by using more fuel to fly around the blockade.

Total operating expenses rose 18% to QAR50 billion. Capacity, measured in ASKs, increased 13.5% YOY.

Qatar saw cargo revenue grow 16.8% YOY, while ATKs increased 11.8% annually. “Our cargo business is now the largest in the world,” Al Baker said.

“Our success is due to an unwavering belief in our strategy to give our passengers the very best, backed by the perseverance and hard work of our staff. I look forward to 2019-2020 with optimism and confidence that our growth will continue, and we will serve even more countries around the world,” Al Baker said.

The airline launched 11 new destinations during the fiscal year and has added a total of 31 destinations (as of Sept. 1) since the start of the blockade, growing its network to over 160 destinations worldwide.

Qatar has more than 300 aircraft worth more than $85 billion on order (including options and LOIs). The group said it has the capacity to continue its ambitious but sustainable network expansion strategy.

During the financial year, the group further built its investment portfolio by acquiring 5% of the total issued share capital of China Southern Airlines. Other holdings in airlines include Air Italy, Hong Kong-based Cathay Pacific Airways, International Airlines Group, California-based jet charter company JetSuite and Latin America’s LATAM Airlines Group.

Overall, the QR Group invested QAR16.1 billion in acquisition of aircraft and other assets, as well as acquisition of shares of international airlines during the year.

Kurt Hofmann