Qatar Airways’ expansion ‘on a different path from Etihad’

September 3, 2024, 3:08 PM

Virgin Australia jets at Melbourne Tullamarine Airport. The airline was bought out in 2020 when it went into administration

Speculation about Virgin Australia
Qatar ‘more cautious’, say analysts
No interest in management control

Qatar Airways is reportedly keen to buy more stakes in legacy airlines – a strategy that sounds familiar to anyone who knows the history of Etihad but is likely to have a different outcome, according to aviation experts.

Almost a decade ago Abu Dhabi’s flag carrier was running into serious problems with its aggressive expansion plans.

Etihad had acquired minority equity investments in a clutch of underperforming carriers, aimed at feeding traffic into its UAE hub and, ultimately, improving its long-haul network.

From its billion-dollar investments only Air Serbia, Air Seychelles, Aer Lingus and Virgin Australia are still operating today – the last having been revived by investment firms after going bankrupt.

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Now Qatar Airways is being linked to Virgin Australia, with a rumoured 20 percent stake.

“While there are superficial similarities to Etihad’s past strategy, Qatar Airways appears to be taking a more cautious and strategic approach,” says Linus Bauer, managing director of aviation consultancy BAA & Partners.

The Doha carrier is “leveraging investments that complement its global network rather than pursuing aggressive expansion for its own sake”, he adds.

Qatar Airways is a Oneworld alliance member and flies to more than 170 destinations in more than 80 countries.

It already has a 25 percent stake in International Airlines Group, which owns British Airways. It also holds 10 percent stakes in Latam Airlines and Hong Kong carrier Cathay Pacific, as well as a 3.4 percent share of China Southern Airlines.

“I think the key difference is that Qatar Airways is not seeking to exert management control but sees these as purely investments,” says John Grant, partner at UK consultancy Midas Aviation and an AGBI columnist.

“Virgin Australia have been seeking further investment so it’s a good match.”

For Etihad, Grant adds, “it was much more of a roll-up play” – when businesses are acquired and then rolled into their parent company.

In 2019 Qatar Airways took a 60 percent stake in the $1.3 billion airport being built in Rwanda. It has code-share agreements with several airlines in Africa including Rwandair.

Last month it acquired a 25 percent stake in the Southern African independent carrier Airlink, expanding its operations further.

Shukor Yusof, aviation analyst at Endau Analytics in Singapore, says: “There’s a method in Qatar’s ‘madness’ and this is an extension of what the previous CEO had introduced – taking calculated risks.”

He suggests the Doha-based carrier could be eyeing up an increased stake in Cathay Pacific as well as opportunities in Europe and the US.

AGBI has contacted Qatar Airways for comment.