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Snubbed by American, Qatar buys stake in Cathay

November 8, 2017 Headline News No Comments Email Email

Following a well publicised snub from American Airlines earlier this year, Qatar Airways has just bought 9.6% of Hong Kong’s Cathay Pacific, adding to its expanding list of airline stakes.

Qatar is a keen investor in other airlines. It owns 20% of International Airlines Group (IAG), the parent company of British Airways and Iberia. It holds a 10% stake in LATAM Airlines Group and it owns 49% of Italian carrier Meridiana.

In June, Qatar even made a bid to buy into American Airlines, declaring: “Qatar Airways sees a strong investment opportunity in American Airlines. Qatar Airways believes in American Airlines’ fundamentals and intends to build a passive position in the company with no involvement in management, operations or governance.”

Qatar Airways chief executive Akbar Al Baker

The Washington Post reported at the time that Qatar planned to buy “at least a 10% stake” in American. But Qatar later said it would not exceed 4.75%.

The Qatar move on American seemed strange from the outset, in view of the animosity that exists between American and Gulf carriers. Not long after its overture towards American, Qatar Airways’ outspoken chief executive Akbar Al Baker called American airlines “crap”, saying their passengers were “always served by grandmothers”.

No-one was sure whether Al Baker meant American airlines generically or American Airlines specifically, but American’s chief executive Doug Parker was furious.

Cathay Pacific A350

Qatar Airways said later it had decided “not to proceed with its proposed passive financial investment in American Airlines” and instead to “investigate alternative investment opportunities” that met its objectives.

“Qatar Airways will continue to seek opportunities to invest in global aviation to support the airline’s goal to offer the best possible travel experience for its customers,” it said in August.

It has now done just that, in the form of a Cathay Pacific buy-in. Reuters reported that Qatar acquired the Cathay stock from Hong Kong’s Kingboard Chemical Holdings for HKD 5.16 billion (about AUD 860.5 million), making it Cathay’s third biggest shareholder after Swire Pacific and Air China.

Al Baker pointed out that Cathay Pacific was “a fellow oneworld member” and “one of the strongest airlines in the world”.  He said Cathay had “massive potential for the future.”

American Airlines is a fellow oneworld member too, of course.

Cathay chief executive Rupert Hogg said Cathay and Qatar already worked closely as members of oneworld and Cathay looked forward to a continued constructive relationship.

Written by Peter Needham

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