Qatar’s national carrier has spent nearly $2 billion to purchase a tenth of International Consolidated Airlines Group (IAG), which owns British Airways (BA) and Spain’s largest airline, Iberia.
The move is expected to foster closer ties between Qatar Airways and the two European airlines. According to the national carrier’s CEO Akbar Al Baker, “IAG represents an excellent opportunity to further develop our westwards strategy.”
The $1.7 billion purchase was made at a time when Qatar Airways has been expanding rapidly into Europe, taking aim at competitors Lufthansa and KLM Royal Dutch Airlines with new routes to Frankfurt and Amsterdam.
BBC reports that state-backed Qatar Airways would have bought a larger share of IAG, but was limited by overall ownership caps due to the requirement that European Union airlines by owned by a majority of EU shareholders.
Speaking to Reuters, Analyst Mark Irvine-Fortescue at brokerage Jefferies said Qatar’s investment would likely come “at the expense of Air France and Lufthansa.”
“This strategy could be seen as a defensive ‘if you can’t beat them, join them’ move and should in time improve IAG’s structural and competitive positioning,” he added.