Qatar Airways buys 10% stake in British Airways owner IAG
State owned Qatar Airways has bought a 9.99% stake in British Airways’ owner International Airlines Group, as part of its plan to become an ever larger part of global air travel. ‘The fast-growing and well-financed Gulf airlines are a threat to US and European airlines. The Emirate now has a major role as a UK investor; it announced this week a deal to buy Canary Wharf. Qatar is also the largest shareholder in Barclays Bank and J Sainsbury, and the 2nd-largest investor in the London Stock Exchange. Doha-based Qatar Airways and IAG — which also owns Iberia — are now expected to forge closer working arrangements. BA and Qatar Airways already have a code-share agreement that enables their respective passengers to fly on some of the other airline’s flights, and these arrangements could be expanded. Qatar Airways (CEO is Akbar Al Baker – who says people in the UK should not be so touchy about aircraft noise ...) said it may increase its shareholding in IAG in future, although non-EU airlines are banned from owning majority stakes in EU carriers. The price of the recent Qatar purchase in IAG was not published, but is thought to be around £1.15bn. The Qatar Investment Authority has a 20% stake in Heathrow (HAL) creating possible conflicts of interest on landing charges.
Qatar buys 10% stake in British Airways owner
Qatar Airways has emerged as the owner of a 10% stake in International Airlines Group (IAG), the owner of British Airways (BA) and Iberia.
The Gulf airline is already a member of the Oneworld alliance.
Willie Walsh, IAG’s chief executive, said he was delighted Qatar had become a “long-term supportive shareholder”.
The stake, worth about £1.15bn, gives Qatar closer links with a group that has two major European hubs and strong transatlantic networks.
Mr Walsh said his company would explore what “opportunities exist to work more closely together and further IAG’s ambitions as the leading global airline group”.
Akbar Al Baker, chief executive of Qatar, said: “IAG represents an excellent opportunity to further develop our westwards strategy.”
Earlier this month he criticised European airlines, saying they they “cannot keep up” with the competition posed by Gulf rivals.
The two groups’ route networks are largely complementary, with Qatar strong in southeast Asia, India and the Middle East, while Iberia flies to many destinations in South America.
Qatar said it could increase its holding, but would be limited by the 49% cap on non-EU ownership of European airlines.
Neither group said whether IAG had been aware of Qatar’s stake-building and did not say who the shares had been bought from, or when.
Qatar has more than 130 aircraft and a further 340 on order. It is competing with other Gulf airlines including Emirates, based in Dubai, and Abu Dhabi’s Etihad.
The Doha-based carrier had 22m passengers in the 2013-14 financial year, compared with 44.5m for its larger rival Emirates. IAG carried just over 77m passengers in 2014.
Qatar’s move comes as IAG attempts to complete a takeover of Aer Lingus for about £1.3bn.
The company has said it planned to run the Irish airline as a separate business with its own brand, management and operations.
IAG was formed when BA and Iberia merged in 2011. It has about 430 aircraft and 60,000 employees.
Shares in IAG closed down 3.5% at 544.5p on Friday, making it the biggest faller on the FTSE 100.
The stock has risen by more than a third in the past 12 months and the company is valued at £11.4bn.
See also FT
Qatar Airways buys 10% stake in BA-owner IAG
The FT says:
“Mr Al Baker sits on Heathrow’s board as a representative of the sovereign wealth fund, and therefore has a say over whether the airport should raise or cut its landing charges for airlines — an increase would benefit the hub, while a reduction would help BA and other carriers including Qatar Airways.
“IAG and Qatar Airways declined to comment when asked if there was a conflict of interest for Qatar and Mr Al Baker.” Link
But Heathrow said it “has strict governance processes in place, which ensure that any shareholder with a conflict of interest registers all potential conflicts and is excluded from any decision making where a conflict exists”.
Wikipedia lists the shareholders of IAG:
|Europacific Growth Fund||5.261%|
|Capital Research and Management Company||5.049%|
|Templeton Global Advisors Limited||5.011%|
|Legal and General Group plc||3.226%|
|Sociedad Estatal de Participationes Industriales||2,460%|
|Lansdowne Developed Markets Master Fund Ltd||1.269%|
Europacific Growth Fund is part of Capital Research and Management Company (based in the USA). Both these together own over 10%, slightly above Qatar Airways.
Qatar Airways buys 9.99% stake in British Airways owner IAG
Qatar Airways has taken a 9.99 per cent stake in British Airways owner IAG.
The gulf carrier said the deal will “enhance” and “strengthen” existing commercial ties initiated through codeshare agreements as well as its membership of the Oneworld alliance.
Qatar said it may consider increasing its stake over time, but it was not currently intending to exceed the agreed 9.99 per cent.
“IAG represents an excellent opportunity to further develop our Westwards strategy,” said Qatar Airways CEO Akbar Al Baker.
Non-European shareholders of IAG including Qatar Airways are subject to an overall cap on ownership, as a result of the requirement for EU airlines to be majority owned by EU shareholders.
IAG’s CEO Willie Walsh, said: “We’re delighted to have Qatar Airways, one of the world’s premier airlines, as a long term supportive shareholder.
“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.”
Qatar Airways formally joined Oneworld in October 2013.
Heathrow Airport Board member, Akbar Al Baker, says Heathrow should have 24 hour flights
One of the Board members of Heathrow Airport is Akbar Al Baker, who is the CEO of Qatar Airways and led the development of the new Doha airport. He is on the Board because Qatar Holdings bought a 20% stake in Heathrow in 2012. He has caused a storm of protest after claiming, with stunning insensitivity and demonstating a woeful lack of understanding of British democracy, that Heathrow should have 24 hour flights – ignoring the well-being of those overflown. The benefit would be that his companies would be more profitable. Akbar Al Baker said Britons make an “excessive” fuss about noise levels from aircraft flying over their homes” and home owners living under flight paths “wouldn’t even hear the aircraft” after a while.” He appears not to understand that in Europe, unpopular and damaging major developments cannot just be steamrollered through, as they perhaps can be in the Gulf States. Mr Al Baker thinks European airports should open 24 hours a day if they want to compete with the emerging Gulf hubs in Dubai and Doha. Though rapidly denied by Heathrow, which distanced itself from Mr Al Baker’s comments, it is indicative of a way of thought which people may fear is prevalent on the Heathrow board.