Unease mounts over Qatar’s stake-building in IAG

Concerns are growing about mounting Qatari influence at International Airlines Group after the Gulf state’s airline boosted its stake in British Airways’ parent company for the second time in the space of a few weeks.

Industry sources said IAG was watching state-owned carrier Qatar Airways closely amid growing speculation that Qatar, which now owns 15pc of IAG, could “comfortably” push for a board seat.

“For a FTSE 100 stock with no major shareholders, that’s a very serious number,” one source said, adding that Qatar airline’s intentions were “unclear”. “If they wanted to get [a board seat], it would be pretty straightforward.”

Another said they believed the Doha-based carrier would now start “agitating” for board representation at IAG. Willie Walsh, the pugnacious IAG chief executive, said earlier this month that Qatar Airways had not requested a board seat, although that was before the Gulf carrier lifted its stake to 15pc last week.

Qatar Airways first invested in IAG, which also owns Spanish airlines Iberia and Vueling and bought Ireland’s Aer Lingus last year, in January 2015, when it snapped up a 9.99pc stake. At the end of April, Akbar Al Baker, Qatar Airways’ chief, revealed the carrier had lifted its stake to just shy of 12pc.

Last Tuesday, it disclosed it had increased its holding to 15.01pc and said: “Qatar Airways believes IAG is very well positioned in Europe on the back notably of its attractive exposure to the transatlantic segment, its leading positions at the London and Madrid hubs and the future benefits from the acquisition of Aer Lingus.”

Mr Al Baker added that the IAG relationship “has helped to deliver on our westbound strategy”. The fast-growing Gulf carriers have become embroiled in a spat with their US rivals, who claim Qatar Airways, Etihad and Emirates unfairly benefit from state aid.

Qatar has said it will consider raising its holding further. Theoretically, it could hold as much as 49pc of the BA-owner, but is barred from owning more than that under European Union rules, which prohibit non-EU investors from controlling European airlines.

Complicating a potential push for a board seat is Heathrow. Qatar Holding, part of the Gulf state’s sovereign wealth fund, owns 20pc of the airport. Mr Al Baker already has a seat on Heathrow’s board and Britain’s largest airport counts IAG as its biggest customer.

Irrespective of whether Qatar Airways requests IAG board representation, increased influence at IAG, combined with Qatar’s investment in Heathrow could raise concerns about the Gulf state’s grip on British aviation. Qatar’s stake-building comes as Mr Walsh seeks to extend IAG’s influence by pursuing partnerships and codeshares with carriers outside Europe. Earlier this year, BA struck a co-operation agreement with Chile’s Latam.

IAG is also in codeshare talks with China Eastern and China Southern and is thought to be considering bids for Wizz Air, Hungary’s low-cost airline, Norwegian Air, and the UK’s Monarch Airlines.

IAG declined to comment and Qatar Airways would not comment on board representation.

Published on The Telegraph.