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Qatar lifts stake in Aer Lingus owner IAG to over 25pc

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Qatar Airways CEO Akbar Al Baker with cabin crew Bernadet Nagy and Maja Olovcic in Dublin

Qatar Airways CEO Akbar Al Baker with cabin crew Bernadet Nagy and Maja Olovcic in Dublin

Qatar Airways CEO Akbar Al Baker with cabin crew Bernadet Nagy and Maja Olovcic in Dublin

Qatar Airways has strengthened its position at Aer Lingus owner IAG after lifting its stake in the airline group to 25.1pc.

The Gulf carrier previously owned 21.4pc, having first acquired a holding in IAG in 2015.

Shares in IAG edged 1pc higher by early yesterday afternoon.

Qatar's chief executive, Akbar Al Baker said the increased investment reflected the airline's "continued support for IAG and its strategy".

IAG also owns British Airways, Level, Iberia and Vueling. It is in the process of buying Air Europa.

Qatar itself owns stakes in Cathay Pacific, Latam Airlines and Southern Airlines. It has used the investment strategy to help drive traffic through its Doha hub.

The same strategy was unsuccessfully pursued by another Gulf airline, Abu Dhabi's Etihad.

Under current rules, all EU airlines must be more than 50pc-owned by EU nationals or entities.

Airlines had scrambled in the face of Brexit to ensure that ownership among non-EU shareholders would remain below 50pc to make sure the carriers would be compliant with ownership rules.

In February last year, IAG moved to limit ownership of the airline group by non-European Union shareholders to 47.5pc.

But that restriction was lifted last month by IAG after non-EU ownership levels in the carrier group fell to 39.5pc.

A continuing Saudi-led embargo on Qatar has thwarted the carrier's expansion efforts in the region.

"Qatar Airways continues to consider opportunities to invest in airlines and support management teams that share our vision to enhance travel opportunities for airline passengers across the globe," said Mr Al Baker.

Increasing its stake in the Aer Lingus owner gives Qatar greater leverage as IAG chief executive Willie Walsh prepares to exit the post next month, and British Airways grapples with fallout from the UK leaving the European Union.

Mr Walsh and Mr Al Baker have had one of the closest dynamics in the airline industry, and the increased holding will hand the Mideast carrier additional rights as that personal partnership comes to an end.

In 2017, British Airways leased a number of Qatar Airways' airplanes and crews to help it cover strike action by some UK staff. Both British Airways and Qatar are part of the Oneworld airline alliance,

The increased holding in IAG ties Qatar Airways more closely to a strong player in Europe just days after a foray into the Italian market failed.

Qatar Airways and the Aga Khan decided to liquidate Air Italy, which had aspired to become a rival to Alitalia.

"We agree with Qatar's move in choosing to invest in Europe's best positioned long-term play," said Daniel Roeska, an analyst at Sanford C. Bernstein.

"The move may create new headaches for the IAG team, and potentially put a time limit on buying the shares for non-EU investors," he added.

Qatar Airways has always insisted that the interest in IAG is a financial one and not an attempt to gain control. It has so far declined to seek a seat on the board.

Voting rights of more than 25pc in a UK firm allow a shareholder to block special resolutions such as the adoption of new articles of association or changing a company's name.

IAG announced in December that Mr Walsh would be retiring from the airline group he helped to create.

Iberia chief executive Luis Gallego was named as his successor.

IAG was created in 2011 with the merger of British Airways, where Mr Walsh had been chief executive since 2005, and Iberia. Aer Lingus entered the IAG fold in 2015 when it was bought by the carrier group for almost €1.4bn.

Mr Walsh, who grew up in Drumcondra on Dublin's northside, joined Aer Lingus in 1979 as a trainee pilot cadet at the age of 17 and became one of the airline's youngest ever captains in 1990.

He later became a union representative at the airline, before moving into management as chief operating officer.

He was appointed Aer Lingus CEO in 2001 after the 9/11 terror attacks as the airline was threatened with collapse.

Additional Reporting: Bloomberg

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