Whether Qatar Airways further increases its stake in Aer Lingus and British Airways owner IAG will fully depend on the outcome of UK and EU Brexit trade talks, according to a leading aviation analyst.
Qatar Airways has increased its holding in IAG to 25.1%, buying another stake worth $600m (€555m) as part of a strategy it has described as highly successful. Qatar previously held 21.4% of IAG, which also owns Spanish carriers Iberia and Vueling.
Goodbody’s Mark Simpson said Qatar’s stake increase is based on its investment in IAG having been a success to date, and shows there is confidence in the European group stretching beyond the pending exit of chief executive Willie Walsh.
Mr Walsh will step down as IAG boss next month.
Mr Walsh and Qatar Airways CEO Akbar Al Baker had one of the closest dynamics in the airline industry, and the increased holding will hand Qatar additional rights as that personal partnership comes to an end.
Mr Simpson said Qatar is unlikely to buy more of IAG until questions over IAG’s corporate structure are resolved as part of the Brexit talks.
While headquartered and listed in London, IAG is domiciled in Spain and has the aforementioned EU subsidiaries in Ireland and Spain. It has to remain compliant with the EU’s rules in order to retain flying rights. Foreign companies are not able to take full control of European airlines as a condition of their air operating licences.
Qatar’s latest move closely follows IAG removing a cap on non-EU investment.
IAG capped non-EU ownership at 47.5% in February 2019. The limit was removed last month after IAG’s non-EU ownership fell to 39.5%, making room for share purchases from outside the bloc.
Qatar first invested in IAG in 2015, buying 9.99% of the company, and has steadily increased its stake since.
It also owns shares in China Southern and Cathay Pacific, and said earlier this month it was in talks about doubling its holding in Chile’s LATAM Airlines Group to 20% and buying a 49% stake in Africa’s RwandAir.
It said it continued to support IAG and its strategy.
“Our investment to date has been highly successful and the announced increase in our shareholding is evidence of our continued support of IAG and its strategy,” said Mr Al Baker.
IAG’s share price rose by around 1.6% on the back of Qatar upping its stake.