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KarelXWB
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QR announces LATAM investment

Tue Jul 12, 2016 9:15 am

Major announcement at Farnborough today: Qatar will invest $618m into LATAM Group, acquiring 10% of the company.

Via https://twitter.com/thatjohn
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KarelXWB
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Re: QR announces LATAM investment

Tue Jul 12, 2016 9:59 am

Press release:

http://www.qatarairways.com/us/en/press ... ease_latam

LATAM Airlines Group S.A., Latin America’s leading airline group, and world-class airline Qatar Airways, both members of the oneworld alliance, announced today that they have entered into a subscription agreement providing for Qatar Airways to acquire up to 10 per cent of LATAM’s total shares, which will be acquired in connection with a capital increase.

As provided for in the subscription agreement, LATAM Airlines Group will hold an Extraordinary Shareholders Meeting no later than 2 September, 2016 to propose a capital increase in the amount of US$613 million through the issuance of new shares at a price of US$10 per share.
What we leave behind is not as important as how we've lived.
 
Eirules
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Re: QR announces LATAM investment

Tue Jul 12, 2016 10:17 am

Are QR trying to buy a stake in each of the oneworld airlines to increase their influence in the alliance? They have only recently increased their stake in IAG (BA, IB, in the future EI & if rumours are to be believed possibly AY too), now LATAM. Will they look at others like QF (not sure how that'd work with the EK tie up), CX or perhaps even RJ?
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Qatara340
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Re: QR announces LATAM investment

Tue Jul 12, 2016 10:25 am

QR announced "up to" 10%. Does that mean it can be less than 10%?
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jfk777
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Re: QR announces LATAM investment

Tue Jul 12, 2016 1:52 pm

Eirules wrote:
Are QR trying to buy a stake in each of the oneworld airlines to increase their influence in the alliance? They have only recently increased their stake in IAG (BA, IB, in the future EI & if rumours are to be believed possibly AY too), now LATAM. Will they look at others like QF (not sure how that'd work with the EK tie up), CX or perhaps even RJ?


Doubtful that Qatar would take a stake in Cathay since Swire owns 45% and the Chinese Government through Air China owns 40%. The free float is small.

As for Latam, its interesting how Qatar wants to buy stakes in OW airlines.

Azul, GOl, AeroMexico and LATAM all have North American and/or Chinese investors. Avianca is an odd airline for the Star Alliance right next door to Panama's Copa, if Delta buys a stake in Avianca would they change alliances to Skyteam.
 
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Mistral1
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Re: QR announces LATAM investment

Tue Jul 12, 2016 2:41 pm

Next announcement will be the launch of direct flights to Santiago I guess.
 
a380787
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Re: QR announces LATAM investment

Tue Jul 12, 2016 2:42 pm

jfk777 wrote:
Avianca is an odd airline for the Star Alliance right next door to Panama's Copa, if Delta buys a stake in Avianca would they change alliances to Skyteam.


No offense, but COPA is a niche airline that does 737 north-south scissor hub with a singular PTY hub that has no domestic market to speak of (unless you count the dinky-tiny CopaColombia). Compared that to Avianca-TACA (now just Avianca), which is essentially Star's single anchor airline for most of LatAm, with hubs stretching from SAL through to GRU. They're also the only other pan-LatAm airline group that has any critical mass to compete against the monstrosity known as LATAM (i.e. LAN+TAM).

Even under your scenario, AV's choice is either (1) king of Star's LatAm map, or (2) having to compete for attention from DL against Aeromexico AM, GOL G3, and Aerolíneas Argentinas AR. A good analogy would be what's happening to TG and LO - drastically overshadowed by the premier airline right next door (SQ and LH Group respectively).

If anything, I see the chance of CM leaving Star quite a bit higher than AV leaving Star, although neither scenario is likely at the present.
 
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PerfectGriffin
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Re: QR announces LATAM investment

Tue Jul 12, 2016 5:23 pm

Interesting investment. Perhaps we will see more expansion into South America now.
 
RCS763AV
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Re: QR announces LATAM investment

Tue Jul 12, 2016 6:05 pm

This comes at a time when the major south american airlines are ailing. LA, AV and to a larger extent G3 are having financial troubles caused by depreciation of their home currencies and a softening dynamic of their natural markets (in the case of Brazil, a rather rough stoppage of growth). Aircraft deferrals and cost cutting measures are being heard all over, even CM has cut their aircraft deliveries due to weak markets.

An airport like BOG, which has had two-digit consistent growth for the past 10 years, saw a 0.7% increase in passengers this May as compared to last year. The situation at GRU is even dimmer and MEX is not far above, to name the three main hubs.

But, QR's investment is a sound one IMO. Buy now when it's cheap, into a group of airlines which still controls 50% of the Latin American market as a whole (local regulators are laughable) and will be poised to receive the greatest returns once the market rebounds in a couple of years.

This is also why UA, DL and Hainan are looking into investing in AV.
 
winGl3t
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Re: QR announces LATAM investment

Tue Jul 12, 2016 6:16 pm

A little far fetched but QR is in need of pilots and airplanes to grow, while LATAM is suffering from overcapacity maily in Brazil.
Would be nice to see QR drop DOH-GRU-EZE and LATAM starting SCL-EZE-DOH (789) and GRU-DOH (A359)
 
dcajet
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Re: QR announces LATAM investment

Wed Jul 13, 2016 12:37 am

Besides all the above reasons, lets not forget that LATAM is swimming in an ocean of red ink; this has to be a welcome lifeline for them. The merger with TAM, while still very much on point from the strategy side - to be the #1 airline in the region LAN had to be in Brazil - but the timing did not help. The next 12-18 mos will be critical for LATAM as they weather the storm.
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LAX772LR
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Re: QR announces LATAM investment

Wed Jul 13, 2016 1:55 am

a380787 wrote:
No offense, but COPA is a niche airline that does 737 north-south scissor hub with a singular PTY hub that has no domestic market to speak of (unless you count the dinky-tiny CopaColombia).

One could hardly call CM, with service to more than a dozen US destinations, two Canadian, and every large market in the Caribbean and LatAm... a "niche airline"
I myself, suspect a more prosaic motive... ~Thranduil
 
jfkgig
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Re: QR announces LATAM investment

Wed Jul 13, 2016 5:20 am

jfk777 wrote:
Eirules wrote:
Doubtful that Qatar would take a stake in Cathay since Swire owns 45% and the Chinese Government through Air China owns 40%. The free float is small.



Air China owns 30%, and CAAC owns 2% of CX (Swire does own 45%). The rest is owned by public shareholders. The principal shareholders (and CX) own cross-shareholdings in the others, and are co-owners in various joint ventures, so it is even more complicated an ownership structure than would appear, and any transaction with any other unrelated party is essentially impossible.

An investment in CX would in any case involve capital of a different order of magnitude as compared to LATAM (or QR itself for that matter), but there are no potential sellers in any case.

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