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Jan 30, 2015 4:26 AM

Qatar Airways buys nearly 10 percent of BA, Iberia parent

The Associated Press

DUBAI, United Arab Emirates (AP) Qatar Airways announced Friday it has bought nearly 10 percent of the parent company of British Airways and Spain's Iberia, deepening wealthy Qatar's business ties to Europe and intensifying competition with the airline's fast-growing Gulf rivals.

The Qatari government-backed airline said the decision to buy 9.99 percent of International Consolidated Airlines Group, also known as IAG, was part of an effort to enhance its operations and strengthen commercial ties with the European company.

"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 CEO Akbar al-Baker said in a statement.

Qatar Airways said it may consider increasing its stake further down the road. Financial terms were not disclosed.

Qatar Airways in 2012 joined the OneWorld alliance, becoming the first of the big Gulf carriers to join an international airline alliance. British Airways was a founding member of the alliance, which also includes Iberia, American Airlines, Qantas, Cathay Pacific and several others.

IAG welcomed the move, noting its existing partnership with the Middle Eastern airline. IAG Chief Executive Willie Walsh said he was delighted to have Qatar Airways 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," he said.

Qatar Airways has expanded rapidly in recent years as it and its rivals in the nearby United Arab Emirates, Dubai-based Emirates and Abu Dhabi-based Etihad Airways, increasingly drive long-haul travelers through their fast-growing Gulf hubs.

It is backed by the government of Qatar, a small but wealthy oil and natural gas-rich nation jutting into the Persian Gulf that will host the 2022 World Cup. The country has extensive investments in Europe, including Harrods department store and other high-end London real estate, the Paris Saint-Germain football club and a stake in British bank Barclays.

Qatar Airways is following in the footsteps of Emirati rival Etihad, which has aggressively bought up stakes in foreign airlines, including Italy's Alitalia and Germany's second-biggest airline, Air Berlin.

Qatar's investment comes just days after Ireland's national airline, Aer Lingus, said it supports a takeover bid by IAG that values the Irish carrier at 1.36 billion euros ($1.52 billion). That acquisition still must be approved by Aer Lingus' two biggest shareholders: rival Irish carrier Ryanair and the Irish government.

Etihad also has built a stake in Aer Lingus in recent years and has a code-sharing agreement with the Irish carrier.


Follow Adam Schreck on Twitter at www.twitter.com/adamschreck


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