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Qatar will buy as much as 10 percent of Santiago, Chile-based Latam, it said Tuesday at the Farnborough Air Show, with South America’s biggest carrier planning a capital increase of $613 million in order to facilitate the deal.
Qatar Air became closer to Latam after joining the Oneworld alliance and taking a 15 percent stake in British Airways owner IAG, which is forming a revenue- and cost-sharing pact with the Chilean airline. Taking a stake will cement those ties as the Gulf operator seeks to funnel more passengers via its Doha hub.
“Latam represents an exciting opportunity,” Qatar’s chief executive officer, Akbar Al Baker, said at the briefing, adding that the planned investment will open up links with its global network.
To open the door to Qatar, Latam plans to increase its capital by issuing new stock at $10 a share. The company, which was formed through a merger of Chile’s Lan and Brazilian operator TAM in 2012, will be put the proposal to its investors by Sept. 2.
Qatar has been building a network of international partners. It built up its stake in IAG via a series of share purchases and is also interested in Royal Air Maroc, which would give access to North African markets, as well as Italy’s Meridiana SpA. Talks with Meridiana have been complicated by union opposition to job cuts. Al Baker said Tuesday that Qatar is prepared to walk away from the deal as it “will not accept blackmail by staff.”
Qatar Airways said Monday it more than quadrupled net income to 1.6 billion Riyals ($439 million) in the 12 months through March, with growth to be led by Africa and India. The airline also sees “strong underlying” demand in South America and China.
Latam is faring less well, with a slump in Brazilian traffic likely to force it to delay or cancel some of the 53 wide-body jet orders placed by the company’s constituent units before its formation, CEO Enrique Cueto said last month. He said Tuesday that the airline was “very proud” to partner with Qatar Airways.
©2016 Bloomberg L.P.
This article was written by Deena Kamel Yousef and Chris Reiter from Bloomberg and was legally licensed through the NewsCred publisher network.