UK markets open in 2 hours 13 minutes
  • NIKKEI 225

    -63.59 (-0.27%)

    -157.40 (-0.64%)

    +0.11 (+0.29%)

    +3.70 (+0.20%)
  • DOW

    -943.24 (-3.43%)

    -5.88 (-0.06%)
  • CMC Crypto 200

    -10.15 (-3.72%)
  • ^IXIC

    -426.48 (-3.73%)
  • ^FTAS

    -78.74 (-2.43%)

BA backer Qatar Airways lands £1.5bn state bailout

Oliver Gill
·2-min read
Qatar Airways
Qatar Airways

The Qatari state handed the biggest shareholder in the owner of British Airways a £1.5bn bailout before the full effects of the coronavirus pandemic were felt.

Qatar Airways, which owns a 25pc stake in IAG, will issue the government of the Gulf state new shares to cover losses for the year to March 2020. 

Chief executive Akbar Al Baker blamed “exceptional circumstances” for the airline’s worsening annual performance.

The failure of Air Italy and writedowns associated with the pandemic meant pre-tax losses swelled from 4.7bn Qatari riyals (£1bn) to 7bn Qatari riyals.

In February, Qatar Airways spent more than £450m on increasing its stake in IAG, the FTSE 100 airlines group that also includes Aer Lingus and Spain’s Iberia.  

Qatar’s support of IAG has proved critical as the pandemic gripped the aviation sector. The company’s share price has crashed over 80pc since the start of the crisis.

With the UK Government unwilling to bail out airlines until all other alternatives were explored, IAG launched a £2.5bn capital raise from investors including Qatar Airways. 

“Our investment in IAG has always been for the long term and we continue to support the company through these difficult times for our industry,” Mr Al Baker said in July. 

BA, the largest airline in the IAG group, recently struck a deal with unions over some 10,000 job cuts in response to the pandemic. 

After a bitter war of words with union leaders over the summer, BA bosses also agreed to withdraw the threat of putting those staff that remain on inferior contracts

IAG will head into the typically leaner winter months with a new chief executive.

Long-term boss Willie Walsh stepped down earlier this month after 15 years at the helm, handing over to Luis Gallego, the former head of Iberia.

IAG suffered a bloody nose as over 20pc of investors revolted against the departing boss’s £3.2m pay packet earlier this month.

The Qatari state is also the second-biggest investor in Heathrow, owning a 20pc stake in Europe’s busiest airport.