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Buy-in deal links top airlines from China and Gulf

January 4, 2019 Headline News No Comments Email Email

Two major international carriers serving Australia, one based in China and the other based in the Gulf region and one of the world’s best airlines, have grown closer following an unusual equity investment.

Qatar Airways has taken a 5% stake in China Southern Airlines. It’s unusual because Chinese airlines don’t customarily encourage foreign investment. In this case, Guangzhou-based China Southern (largest airline in China) had already permitted American Airlines to buy a small stake (under 3%), back in 2017.

China Southern is less guarded about the latest buy-in, even issuing a statement saying that Qatar Airways might increase its stake over the next 12 months.

What Qatar Airways paid for its 5% was not disclosed.

China Southern Airlines Boeing 787-8 Dreamliner

Qatar Airways, fully owned by the Qatari government, already owns nearly 10% of Cathay Pacific and 20% of British Airways’ parent International Airlines Group. Qatar Airways also owns 10% of South America’s Latam and 49% of Air Italy.

Qatar Airways is an excellent airline with a good reputation in Australia and a string of international accolades, such as World’s Best Business Class and Best Airline in the Middle East (both are Skytrax awards in 2018).

Its outspoken chief executive Akbar al Baker is steering his airline through a boycott and blockade imposed by Arab states led by Saudi Arabia and the UAE, over a Middle Eastern political dispute.

Qatar Airways 366 seat A350-1000

China Southern, as biggest airline in China, is a very major player which will shift headquarters to Beijing when Daxing Airport opens later this year. It carries a lot of passengers between Australia, North America and Europe.

The deal has interesting implications for alliances. Qatar Airways belongs to Oneworld but al Baker has expressed dissatisfaction with it. China Southern, by contrast, is keen to join Oneworld, having departed the Skyteam alliance.

Written by Peter Needham

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