Engulfed

30 January 2015 By Olaf Storbeck

Taking a 10 pct stake worth $1.7 bln makes Qatar Airways the biggest investor in British Airways’ parent company. The immediate strategic benefit is limited: the groups already cooperate and IAG gets no new capital. But a deep-pocketed, long-term backer can be helpful.

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Qatar Airways has bought 9.99 percent of International Consolidated Airlines Group (IAG), the Gulf carrier said in a statement on Jan. 30. The stake is worth about 1.15 billion pounds ($1.7 billion), based on IAG’s share price, although Qatar Airways did not say what it paid or who it bought the stake from. IAG’s Iberia and British Airways are already partners of Qatar Airways in the oneworld alliance.

The Qatari carrier is owned by the Qatar Investment Authority (QIA), a sovereign wealth fund. It said it would look to strengthen commercial ties with its European peers and may consider increasing its stake over time, although it did not currently intend to exceed 9.99 percent. “IAG represents an excellent opportunity to further develop our Westwards strategy,” Chief Executive Akbar Al Baker said. European Union rules require airlines in the bloc to be majority-owned by EU shareholders.

Shares in IAG, which have risen by 44 percent in the last three months, fell 0.5 percent by 1030 GMT on Jan. 30, to 561 pence. They earlier reached 590 pence, the highest level since the group was formed four years ago.

IAG Chief Executive Willie Walsh said: “We will talk to [Qatar Airways] about what opportunities exist to work more closely together and further IAG’s ambitions.” The London-based group is trying to buy Irish airline Aer Lingus for $1.5 billion to increase its presence at London Heathrow.

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