Qatar Airways uses Brexit dip to boost stake in BA parent

The carrier, one of three big airlines based around the Gulf that are reshaping worldwide long-haul aviation, increased its ownership in International Airlines Groupfrom 15.67 per cent to just over 20 per cent between July 12 and 28.

The increase marks the third time this year that Qatar, owned by the emirate’s government, has raised its stake in IAG. The company said in April that it had increased its stake from 10 per cent to 12 per cent, then in May that its stake hadreached 15 per cent.

Akbar Al Baker, Qatar Airways’ chief executive, said the “recent market valuation” of IAG had provided what Qatar believed was an “attractive opportunity” to increase its shareholding.

IAG’s share price fell by more than a third in the days following the decision by Britain to leave the EU on June 23, which prompted IAG to issue a profit warning.

While Qatar gave no indication of what it paid, the extra stake would have cost about £376m at a share price of 407.95, the midpoint between the closing price on July 12 and that on July 28.

“We continue to be highly supportive of IAG’s strategy and management team and we do not intend to increase our percentage shareholding further unless there are material changes to the current situation,” Mr Al Baker said.

Qatar’ stake building in IAG, which also owns Spain’s Iberia and Vueling and Ireland’s Aer Lingus, is part of wider efforts by Qatar and Abu Dhabi’s Etihad, its rival, to catch up with Dubai’s Emirates.

Chris Tarry, an independent aviation analyst, said Qatar and Emirates were trying to build relationships with other airlines that would help feed traffic to their main hubs in the Gulf. IAG is an attractive target because of its powerful position at London Heathrow, one of the world’s most important international hub airports.

Emirates, which has been operating for longer, already has significant positions on its own.

“It’s essentially about market access, getting into markets you cannot get into and getting the highest level of value,” Mr Tarry said.

Robin Byde, an analyst at Cantor Fitzgerald, said the two airlines already had some operational links, including co-operation in the air cargo market.

“They seem to have spotted some value and are obviously looking to increase that,” Mr Byde said of Qatar Airways.

Qatar said its interest in IAG was “purely financial” but that the increased shareholding reflected the strength of “commercial and strategic ties” between the companies.

Qatar also noted that non-EU airlines face a cap on their maximum shareholding in airlines if they are to continue to be regarded as EU-owned. The cap stands at 49.9 per cent.

IAG’s shares were down 2.8 per cent in early afternoon in London, at 394.6p.


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