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.
Thoughts?
Up go the fares DOH-LHR
SOME PEOPLE MAY SUGGEST A MONOPOLY/CARTEL
Monopoly and cartel aren’t the same thing.
A monopoly is when there is only one supplier of a product – so cannot be suggested in this case.
A cartel is when suppliers collude to maintain or fix prices – but must be in collusion/co-operation (i.e. agree to fix prices).
or limit supply?
Not as long as Emirates exists. Dubai is the busiest airport in the world for international traffic, and the airline is consistently rated much higher on virtual every count than QA.
don’t compare emiratis to qataris … one is big smelling shit…and the other is gold…you know which is what…
Why would they need to join an alliance to form a cartel or to collude. In the recent past Virgin and BA were caught colluding on fuel surcharges, and they are direct competitors.
In addition then are tons of other airlines that are not part of IAG. Cartels only work when all major suppliers or consumers work together, if one jumps out and can provide enough supply/demand to hurt the cartel then the cartel is no more. You have 2 other major alliances and other independent players plying the same routes as QR, IAG and OneWorld in general, there is no way that IAG+QR or even OW could collude, there are too many other airlines that can offer the same product over the same routes.
It would be good if i could use my airmiles on both airlines soon…
You can already do that since they are part of the One World alliance.
Well the headline is not strictly true. Qatar Airways does not have that sort of money. It should be read Qatar Government buys large stake in IAG.
Not sure of the strategy on this one or even if it’s a good idea. Could be able to force through more code shares on IAG routes and therefore grow their network, maybe give up more access to landing slots at Heathrow. Even though I don’t see the point of this purchase.
Maybe the people running the government are smarter than me or have so much money just lying around they had to do something with it.
What a colossal waste of money. Airlines hemorrhage money in many years due to unpredictability in fuel prices, inflexible overheads, and slim profit margins. Qatar Airways survives on massive government support and its ability to manipulate the size and cost of its non-unionized labor force. Why purchase a chunk of BA, which has none of these advantages? Oh well, I suppose it is the same logic that persuades them to buy overpriced, money-losing hotels and sports franchises. Next up will be the purchase of print media outlets (another huge dinosaur and money-loser).
landing slots?
that’s a lot of MONEY !!
Interestingly, much of the world’s tabloid press is highlighting the deal as a security concern.
http://www.dailymail.co.uk/news/article-2933824/Security-fears-Qatar-buys-BA-stake-Critics-slam-deal-Middle-Eastern-country-links-Hamas-Al-Qaeda.html
Erm…. The views of the Daily Mail can hardly be considered as representative of “the worlds media”. It’s a facist xenophobic rag. To them, EVERYTHING associated with the Arab world is a “security concern”
Please read my post fully: I wrote “the world’s TABLOID press”, of which the Daily Mail is definitely a leading part.
Absolutely…. I stand corrected, but while most of the world don’t take the red-top tabloids seriously, unfortunately, much of the world do treat the Daily Mail as a serious newspaper, which is quite, quite wrong…. And the point I was trying to make.
What about increment of Salary?
When was the last time salary was increased of a non-qatari govt. man ? Ohh yea i remmbr 7-8 yrs back