Qatar Airways in talks to buy 49pc stake in RwandAir

What you need to know:

A stake in an African airline would widen its reach in one of the world’s fastest growing aviation regions.

Doha,

Qatar Airways is in talks to buy a 49 percent stake in Africa’s RwandAir, its chief executive said on Wednesday.

It is also interested in doubling its holding in LATAM Airlines Group to 20 percent.

Although no details have yet been revealed, for instance how much Qatar airways is spending on the stake, the purchase will mean the government of Rwanda will remain with a controlling stake of 51 percent in the airline.

Industry analysts say the deal presents a win-win situation for both airlines, that owning shares in a budding African airline like RwandAir will give Qatar Airways new life and act as a springboard into the African aviation market.

A stake in RwandAir would widen its reach and potentially help Qatar Airways bypass restrictions imposed on it by some Arab states.

“We are very tough negotiators ... we will take our time to negotiate,” Qatar Airways Chief Executive Akbar al-Baker told reporters in Doha.

Qatar Airways already owns stakes in British Airways-parent International Airlines Group, China Southern, Cathay Pacific, and LATAM.

It bought some of its stakes in other airlines since once-lucrative markets the United Arab Emirates and Saudi Arabia banned it from its airspace following a regional political dispute.

Qatar Airways has been forced to fly longer routes to avoid the blocked airspace of some of its neighbours.

The ban does not apply to non-Qatari airlines flying to Qatar. RwandAir could potentially carry passengers from Africa over the blocked airspace to the state-owned airline’s Doha hub without any airspace restrictions.

Although it is still making losses, RwandAir has been expanding over the past decade due to financial injections from the government, many of which are from external loans like the Eurobond.

President Paul Kagame has in the past said that the country was open to privatising RwandAir at the right time and if it made business sense.

RwandAir could not be immediately reached for comment.

Qatar Airways agreed in December to take a 60 percent stake in a new airport in Rwanda -- Bugesera International Airport.

Baker, one of aviation’s most well-known executives, also said the airline could be interested in increasing its holding in LATAM, and working with fellow shareholder Delta Air Lines.

“When the right opportunity comes and at the right price we will look at increasing our investment in LATAM,” he told Reuters.

Qatar Airways, which holds a 10 percent stake, would be interested in having a stake that is the “same like Delta,” which is 20 percent, he said.

Delta surprised the industry when it announced in September it was taking a $1.9 billion 20 percent stake in the South American airline group.

Qatar Airways has historically had a contentious relationship with Delta and other major US carriers, which have accused Gulf airlines of receiving unfair government subsidies, distorting competition and costing Americans jobs. The Gulf carriers have rejected such accusations.

However, Baker said it had no ill-feeling towards Delta, and was willing to work with the US airline at its hub in Atlanta.

“We can transfer passengers on each other. We are the only Middle Eastern carrier going into their hub so there is huge opportunity,” he said.

Qatar Airways has also expressed interest in taking a stake in India’s IndiGo and Morocco’s Royal Air Maroc. A transaction with either airline has yet to take place.