30th Jan 2015 11:02
LONDON (Alliance News) - International Consolidated Airlines Group SA Friday said state-owned Qatar Airways has acquired a 9.99% stake in the company, a move that strengthens and formalises the ties between the two carriers and continues the recent consolidation in the sector.
No financial details were given on the acquisition of the stake, but based on IAG's closing share price on Thursday of 564.00 pence a share, the stake would be worth nearly GBP1.2 billion. IAG's shares were up 0.2% to 565.00 pence Friday morning.
Middle East airlines like Qatar Airways, Emirates and Etihad Airways have grown quickly over the last decade, creating increased competition for the large European carriers particularly on Asian and Middle East routes. The response of European airline groups like IAG and Air France-KLM has been to forge closer ties with their new competitors. Air France-KLM has a commercial partnership with Etihad.
Qatar Airways is in the Oneworld alliance that also includes IAG airlines British Airways and Iberia. IAG already has close commercial ties with another Oneworld alliance member, American Airlines Group Inc, running a transatlantic joint venture with the US carrier that allows them to closely coordinate on schedules and prices.
?IAG represents an excellent opportunity to further develop our Westwards strategy. Having joined the oneworld alliance it makes sense for us to work more closely together in the near term and we look forward to forging a long-term relationship,? Qatar Airways Chief Executive Akbar Al Baker said in a statement.
Qatar Airways said it may consider increasing its stake in IAG over time, but does not currently intend it to exceed the 9.99% level. It is bound by European Union airline ownership rules that state EU airlines must be majority owned by EU shareholders. Overall non-EU ownership of any EU airline is therefore capped. IAG's other major shareholders currently include US-based Capital Research and Management Company and Franklin Resources Inc.
The Qatar Airways stake buy also comes at a time when IAG, which also owns Spanish low-cost carrier Vueling, is trying to acquire Irish flag carrier Aer Lingus PLC, a deal that needs to be agreed by major Aer Lingus shareholders Ryanair Holdings PLC and the Irish government.
"We're delighted to have Qatar Airways, one of the world's premier airlines, as a long term supportive shareholder. We will talk to them about what opportunities exist to work more closely together and further IAG's ambitions as the leading global airline group," said IAG Chief Executive Willie Walsh in a statement.
By Sam Unsted and Steve McGrath; [email protected]; @SamUAtAlliance; [email protected]; @stevemcgrath1
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