Qatar raises stake in British Airways owner

02 August 2016

Brexit triggered drop in airline group stock price

Qatar Airways has increased its stake in London-based International Consolidated Airlines Group (IAG) to 20 per cent.

This means the Qatari airline is now the largest investor in IAG, which owns a number of major international airlines including British Airways, and that it could become a major influencer in the group’s future direction although its Group CEO has played down any intention to seek a seat on the board.

It is the second time this year in which the Qatari airline has increased its shareholding in IAG. The company increased its stake in IAG from 9.9 per cent to 15.67 per cent in May, and at the time kept the door open for further increasing its future shareholding in the company.

It is understood that the recent drop in IAG’s stock price,as a result of the economic uncertainty following the Brexit vote, provided the perfect opportunity for the Qatari airline to further increase its shareholding in IAG.

“The recent market valuation of one of the world’s leading airline groups has provided what we believe is an attractive opportunity to increase our shareholding in IAG,” Akbar al-Baker, Qatar Airways Group CEO said in a statement.

Al-Baker also added that his firm “does not intend to increase our percentage shareholding further unless there are material changes to the current situation.”

In theory, Qatar Airways - or any other foreign investor - could only acquire up to 49.9 per cent of AIG due to existing EU policies on foreign ownership of European airlines.

It is unclear how the UK policy will shift once it exits the EU.

IAG’s price per share is understood to have slipped by 24 per cent since the referendum on 23 June, when the majority of voters in the UK indicated they would like to exit the European Union.

IAG is the parent company of UK’s British Airways, Spain’s Iberia and Ireland’s Aer Lingus. 

In July, Qatar Airways announced it plans to take a 10 per cent stake in Chile’s Latam Airlines Group, South America’s largest carrier, and a 49 per cent stake in Meridiana, Italy’s second largest carrier.

Qatar Airways has recently released its full year financial statement, the first since it was founded in 1994.

The airline’s operating profit tripled and its net profit quadrupled in the fiscal year ending in March 2016 on the back of revenues that rose 4.3 per cent to reach QAR35.6bn ($9.77bn). 

The airline plans to receive 20 new aircraft in the fiscal year 2017.

In March 2016, the airline company released its financial statement for the first time, in a move that is understood to strengthen its stance against allegations it has received unfair subsidies from the government.

 

 

 

 

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