LONDON (Jan 30): Qatar Airways bought a 9.99 percent stake in British Airways' parent IAG, anchoring itself to its main European ally in a partnership that promises better access to the Americas and traffic flows through its Gulf hub.
The Middle Eastern carrier may consider increasing its stake further over time, Qatar said in a statement today.
Qatar is limited to a 49 percent stake in a European carrier, and the airline said it wants to stick to its current holding for now.
Qatar Airways and IAG have fostered closer relationships since Qatar Chief Executive Officer Akbar Al Baker joined the Oneworld Alliance in Oct 2013, sponsored by IAG CEO Willie Walsh.
The surprise purchase of a stake comes as IAG itself seeks to purchase an airline, with its preliminary bid for Ireland’s Aer Lingus valued at about US$1.52 billion.
“IAG represents an excellent opportunity to further develop our Westwards strategy,” Al Baker said in the statement. “It makes sense for us to work more closely together in the near term.”
IAG rose as much as 26 pence, or 4.6 percent, to 590 pence in London. The stock rose 21 percent last year after more than doubling in value in 2013, beating its European peers as Walsh pushes through savings at the Iberia unit and benefits from a booming trans-Atlantic travel market.
Expansion strategy
The Qatar deal follows investments by regional rival Etihad Airway, the No. 3 in the Persian Gulf, which has sought to expand its global footprint by adding holdings in airlines including Air Berlin and Alitalia SpA.
Emirates, Qatar Air and Etihad have used their geographic position at the crossroads of global flightpaths to funnel more traffic through their hubs, with Dubai taking the crown from London Heathrow last year as the largest airport for international traffic.
The stake purchased by Qatar Airways, which is state-owned, is valued at about 1.15 billion pounds (US$1.73 billion), based on the close in London yesterday.
Qatar has sought to invest its wealth from natural-gas resources with purchases of stakes in well-known brands from car-maker Volkswagen to the Harrods department store in London.
Al Baker has rebuffed claims by legacy carriers in Europe that the expansion of the Persian Gulf carriers comes at the expense of airlines including Deutsche Lufthansa or Air France-KLM Group.
Walsh has been a proponent of consolidation in the European aviation market, pushing through the merger of British Airways and Iberia to create IAG in 2011.
IAG added Deutsche Lufthansa's BMI unit -- previously British Midland -- a year later and then bought Spanish discounter Vueling in 2013.
Buying Aer Lingus would win IAG scarce take-off and landing positions at Heathrow airport, Europe’s top hub.
“We will talk to them about what opportunities exist to work more closely together and further IAG’s ambitions as the leading global airline group,” Walsh said of Qatar in a separate release.