Qatar Air Plots New Acquisition to Extend Global Growth Push

(Bloomberg) -- Qatar Airways Ltd. plans to buy a stake in another foreign airline, extending an expansion push that’s seen the Gulf carrier build up overseas holdings and announce new routes to the U.S. even as President Donald Trump’s seeks to restrict travel to the world’s largest economy.

The state-owned company, which has expressed interest in Royal Air Maroc in the past, expects to finalize the purchase of a 49 percent stake in Italy’s Meridiana SpA in the coming days. The Persian Gulf airline also plans to submit a joint application with Qatar Investment Authority to set up a new Indian carrier in “weeks,” Chief Executive Officer Akbar Al Baker said on Monday.

“We see potential in another acquisition in a region which, unfortunately, I cannot disclose at the moment,” Al Baker said in an interview with Bloomberg Television in Dubai. “The world is still too large, and we see there is potential for us in still many other regions and cities in the world.”

Qatar Airways has aggressively expanded in recent years, accumulating 20 percent of British Airways parent IAG SA and buying 10 percent of South America’s biggest carrier LatAm Airlines Group SA. While the strategy is a gamble, given restrictions on foreign influence and control in most countries, Al Baker said his company will seek to help cut costs by cooperating with its partners on ordering planes and securing supplies.

100 Planes

For the new Indian carrier, the majority stake would be owned by QIA, with Qatar Air taking a minority stake, sidestepping restrictions by the Indian government on ownership of domestic carriers by foreign airlines. The new carrier would have a fleet of 100 narrow-body planes and Qatar Air is open to offers from Boeing Co., Airbus SE and Embraer SA as well as revived interest in Bombardier Inc.’s C Series, Al Baker said.

The Doha-based airline is also continuing to pursue its own growth, announcing plans to make San Francisco its 15th U.S. destination starting in 2018. Qatar Airways has remained bullish on the U.S., even after Trump’s administration targeted the region with an attempt to block travel from six predominantly Muslim nations and a ban on carrying on laptop and tablet computers on flights from Middle East airports, including Doha. By contrast, Dubai-based Emirates last week cited weaker demand caused by the restrictions as the cause for scaling back U.S. services. 

Qatar Airways planes to the U.S. are flying about 75 percent full, down about half a percentage point since the laptop ban. “We didn’t have massive declines like other carriers, so we still have robust loads to the U.S.,” Al Baker said, vowing not to reduce flight frequencies on American routes.

An association of U.S. airlines and labor unions, responding to Qatar Airways’ plans for the San Francisco route, reiterated a claim that the Gulf carrier receives illegal subsidies. Al Baker said he isn’t concerned about U.S. industry pushback, as Trump “is a very wise individual and a very good businessman, and I don’t think he will buy into bullying by the three American carriers.”

The carrier is opening a total of 26 new routes this year and next, in addition to the California destination.

“The U.S. is not the entire world,” the CEO said. “We have a lot of other opportunities, a lot of other new markets which we will keep expanding to.”

To contact the reporter on this story: Deena Kamel Yousef in Dubai, UAE at dhussein1@bloomberg.net.

To contact the editors responsible for this story: Chris Reiter at creiter2@bloomberg.net, Tom Lavell, Christopher Jasper