Qatar Airways uses Brexit dip to boost stake in British Airways parent company

Qatar Airways used the fall in share price of British Airways’ parent company after the Brexit vote to raise its stake to more than a fifth in the latest sign of the groups’ deepening ties, Financial Times reported.

The carrier, one of three big airlines based around the Gulf that are reshaping worldwide long-haul aviation, increased its ownership in International Airlines Group from 15.67% to just over 20% 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% to 12%, then in May that its stake had reached 15%.

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 don’t intend to increase our percentage shareholding further unless there’re material changes to the current situation,” 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,” Tarry said.

Courtesy: ft.com