Business Irish

Wednesday 22 November 2017

Qatar ups stakes in Aer Lingus owner to 20pc

A flight attendant at a bar in the business section of a Qatar Airways Airbus A350
A flight attendant at a bar in the business section of a Qatar Airways Airbus A350

Deena Kamel Yousef

Qatar Airways raised its stake in Aer Lingus owner IAG to 20pc, taking advantage of a drop in the company's stock price since the UK vote to pull out of the European Union to tighten ties with its main European partner.

The state-owned carrier, which increased its holding from 15.7pc as of July 28, doesn't plan to add to the stake, the company said yesterday.

"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," Qatar Airways chief executive officer Akbar Al Baker said.

The announcement was the third time this summer that Qatar Airways, already London-based IAG's biggest shareholder, has sought a stake in a foreign company.

Qatar said while its interest was purely financial, the investment reflected the strength of the commercial and strategic ties between the companies.

As part of its global expansion strategy, the Persian Gulf's No 2 airline also plans to buy as much as 10pc of Latam Airlines Group, South America's biggest carrier, and 49pc of Italy's second-largest airline, Meridiana Fly.

IAG, which also owns Spanish airline Iberia and British Airways, was trading down 1.9pc at 398.5 pence yesterday morning in London, reversing a gain earlier in the day.

The stock has dropped 24pc since the UK referendum on June 23 to exit the European Union.

The company cut its earnings target for 2016 last week, citing the vote approving Britain's pullout from the bloc.

Qatar Airways has raised its stake in IAG since buying an initial 9.9pc last year.

It joined the British company's Oneworld Alliance in 2013, backed by IAG ceo Willie Walsh at a time when European rivals were criticising the expansion of Gulf airlines.

Qatar Airways said it had no plans to increase its shareholding further than the current level unless the situation changed materially.

Under current rules, foreign investors cannot own more than 49pc of a European airline.

Qatar Airways said it owned the bigger stake in IAG as of last Thursday.

On Friday, IAG's shares closed down 0.8pc after it trimmed growth plans for 2016 further and gave a cautious outlook for annual earnings following Britain's vote to leave the European Union.

(Bloomberg and additional reporting Reuters)

Irish Independent

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