Qatar Airways lifted its stake in British Airways owner IAG SA close to 12%, strengthening ties built around the access BA provides to North America via London and the Gulf carrier’s network of Asian routes.
Qatar Airways has increased the holding from the 9.99% bought in January last year, chief executive officer Akbar al-Baker said at the Arabian Travel Market in Dubai, adding that “IAG is the most successful airline today.”
Shares of IAG traded 2.5% higher as of 11.33am in London yesterday, valuing the group, which also owns Iberia and Vueling of Spain and Ireland’s Aer Lingus, at £11.1bn ($16bn), and a 12% stake at £1.33bn.
Qatar Airways drew closer to IAG after joining its Oneworld alliance in 2013, aided by the backing of the London-based company’s CEO Willie Walsh at a time when other European carriers were openly hostile to the expansion of Gulf rivals.
IAG is establishing itself as Europe’s most profitable airline business as Air France-KLM Group and Deutsche Lufthansa grapple with unions over cost cuts. Operating profit jumped almost 70% to €2.34bn ($2.6bn) in 2015 and the company forecasts a similar gain this year.
“Their performance is absolutely over-the-moon,” al-Baker said during an ATM forum. “They’ve already announced record profits and the first quarter was very good.” The executive said Qatar Airways has had two dividends from IAG, as International Consolidated Airlines Group is known, and is due a third soon.
IAG, which reports earnings tomorrow, said it doesn’t comment on its shareholders. European Union rules cap airline investments by companies from beyond the bloc at 49%.
Walsh, who al-Baker described as “the best CEO in the industry,” said in February that the Qatar Airways partnership could expand joint purchases, add to code-sharing arrangements and coordinate cargo units.
Al-Baker said Oneworld membership has been positive but “could have done better” had it not been for a spat between Gulf and US carriers. While Delta Air Lines began the confrontation over alleged state funding of Mideast operators, he said, one of Qatar Airways’ alliance partners had “jumped on the bandwagon,” a reference to American Airlines Group.