DUBAI: Qatar Airways lifted its stake in British Airways parent IAG SA, tightening its grip on the European group after expansion in the Gulf was thwarted by a Saudi-led embargo.
The increase to 25.1% comes less than a month after IAG removed a cap on non-European Union investment imposed as part of Brexit preparations.
The move gives Qatar greater leverage as IAG Chief Executive Officer Willie Walsh prepares to exit the post next month, and BA grapples with fallout from the EU split.
Walsh and Al Baker have had one of the closest dynamics in the airline industry, and the increased holding will hand the Mideast carrier additional rights as that personal partnership comes to an end.
“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,” Qatar Airways CEO Akbar Al Baker said in a statement.
IAG shares traded 1.4% higher as of 8.32am in London. The stock has gained 2.6% this year, valuing the company at £12.7 billion. Qatar Airways is closely held.
While headquartered and listed in London, IAG is domiciled in Spain with EU units including Madrid-based Iberia and Ireland’s Aer Lingus, and has to remain compliant with the bloc’s rules to retain flying rights.
Foreign companies aren’t able to take full control of European airlines as a condition of their air operating licenses.
Voting rights of more than 25% in a UK firm allow a shareholder to block special resolutions such as the adoption of new articles of association, or changing a company’s name, according to law firm Stephens Scown‘s website.
Qatar Airways first bought IAG stock in 2015, though the Mideast company has always insisted that the interest is a financial one and not an attempt to gain control, and has so far declined to seek a seat on the board.
Qatar Airways has invested widely, owning stakes in Latam, Cathay Pacific and China Southern Airlines and most recently Africa’s Rwandair.
It’s doubling down on its IAG holding just days after a foray into the Italian market failed with the liquidation of Air Italy, which it sought to build up as a rival to Alitalia SpA.
IAG froze non-EU ownership at 47.5% in February 2019, amid what it called a lack of clarity about potential ownership restrictions following Brexit.
The limit was removed on Jan 17 after IAG’s non-EU ownership fell to 39.5%, making room for share purchases from outside the bloc.