Qatar Airways has exploited some post-Brexit uncertainty to push up its stake in IAG – parent of British Airways, Iberia, Aer Lingus and Vueling.
IAG’s price has dropped by about a quarter since the Brexit referendum, meaning that Qatar’s increase from 15.67 to 20.01 per cent cost it about £100m less than it would have on June 22.
The Gulf carrier had previously indicated that it would raise its stake, though following the latest investment, “we do not intend to increase our percentage shareholding further unless there are material changes to the current situation", says Akbar Al Baker, CEO of Qatar Airways.
All in all, it’s smart business from Qatar, especially since IAG has just reported a 42 per cent rise in first-half operating profit, despite a trading environment tested severely by terrorism in Europe, multiple French ATC strikes and a plummeting pound.
While UK sales account for a third of IAG’s revenue, the company saw weaker demand across its operations in the weeks leading up to, and after, the referendum, with premium traffic particularly affected. In the second quarter, to June 30, IAG also reported a negative currency impact of €148m due to the weak pound.
“Numerous external factors affected our airlines including the impact of terrorism, uncertainty around the UK's EU referendum and Spain's political situation and increased weakness in Latin American economies.
This led to a softer than expected trading environment, especially in June,” says IAG chief Willie Walsh.
However, although IAG expects its profitability to be hit by the referendum result this year, it does not expect Brexit to have a “significant impact” on its operations.
There is an assumption, of course, that Britain negotiates a sensible exit deal with the European Union.