Story ID: GPqatarcsa01022019
Qatar Airways Takes Stake in China Southern
By: Gregory Polek
Caption: The Gulf airline’s latest acquisition spreads its influence into the world’s fastest-growing market.
Word Count: 304
Qatar Airways has taken a 5 percent stake in China Southern Airlines, the companies announced Wednesday, marking the Gulf carrier’s first investment in the fast-growing and strategically vital Chinese market. The acquisition, completed on December 28, signals Qatar’s continuing efforts to spread its influence across the globe even as a Saudi-led quartet of Gulf neighbors hamper profitability with a political and economic boycott of Qatar instituted in June 2017.

The investment gives Qatar a significant stake in its fifth foreign airline. It already holds 20 percent in British Airways parent International Airlines Group, 10 percent of Latam Airlines Group, 49 percent of Air Italy, and 9.99 percent of Cathay Pacific. 

“China Southern Airlines is one of the most prestigious airlines in the Chinese domestic market and an important market player in the world, with massive potential for cooperation in the future,” said Qatar Airways CEO Akbar Al Baker. “Given the complementary strengths and resources of each of China Southern Airlines and Qatar Airways, there are opportunities for us to work together and build a long-term relationship in ways that would bring benefits to customers of both airlines. The investment is a clear demonstration of Qatar Airways’s continued commitment to connecting travelers across all corners of the world in a way that is meaningful and convenient.”

Qatar Airways in September reported a net loss of 252 million rials ($69 million) during its 2018 fiscal year, blaming its deteriorating financial position on what it calls the illegal blockade. Calling 2018 the most challenging year in its 20-year history, the airline nevertheless managed to increase revenue by 7.22 percent, thanks largely to a 34.4 percent gain in cargo revenue. While capacity growth moderated to 9.96 percent, Qatar directly attributed its lower revenue growth to the blockade that took effect on June 5, 2017, which resulted in a 19 percent drop in departing seats.