There are some things money can’t buy. For everything else, there’s Qatar Investment Authority.

At HKD5,162,266,000 (USD662 million) or HKD12.35 per share, Qatar Airways felt the 378,188,000 shares of Cathay Pacific Airways it bought from Hong Kong-listed Kingboard Chemical Holdings were value for money.

Indeed they were, and the Qataris now own a 9.6% stake in one of Asia’s (if not the world’s) top carriers – for a song.

The Qataris are astute and smart investors, a lot smarter than their Gulf brethren at Etihad who, as part of ex-CEO James Hogan’s ill-thought “equity investment strategy”, bought into now bankrupt Air Berlin and perennially loss-making Alitalia.

Etihad also made other foolish equity investments in Air Serbia, Jet Airways and Air Seychelles.

What’s behind Qatar’s purchase then?

Akbar al-Baker, the airline’s often bellicose and brusque chief executive, is a very clever man with very deep pockets. Deeper in fact than Etihad and Emirates combined, some people in Doha tell us.

There is method to his madness. He sees opportunities in the face of adversities. Politically Qatar is facing a horrendous time from its neighbours, including Saudi Arabia and the UAE (where Emirates and Etihad are based), after the two countries and several others cut off diplomatic relations and imposed a blockade on June 5.

Almost five months on, Qatar and its flag carrier remain very much in business. Nobody has become destitute in that tiny peninsular. Dairy products and other foodstuff are airflown daily from Turkey and Iran.

More importantly, Qatar Airways continues to grow and ever hungry to buy new aircraft and new assets. It has some 200 planes in its fleet with almost 100 on order. The airline flies probably the world’s youngest fleet, with an average age of five years.


For Qatar, buying into foreign airlines isn’t so much about return on investment (ROI), more about getting something intangible – influence. That’s what money buys: the ability to exert (soft) power and to go into places where the next phase of growth is located.

China is one of those places. And that is why HKD12.35 a share in Cathay Pacific was a bargain in al-Baker’s arithmetic. The share price is now hovering around HKD13, thanks to Qatar’s move. Expect to see the stock move up at least 5% to 10% by Christmas.

Al-Baker had tried to buy a 10% stake in US carrier American Airlines (AA) back in June, at the height of the blockade, but the Americans rebuffed him. AA’s boss then said he wasn’t particularly “excited about Qatar’s outreach” and found it “puzzling”.

Qatar already had a 10% stake in International Airlines Group (IAG), the holding company of British Airways, Aer Lingus, Iberia and Vueling, when it paid EUR444 million (USD515 million) for another 10% share in August 2016.

The purchase came right after the UK decided on Brexit and stock prices had tanked. The share is trading around GBp620. This acquisition gives Qatar access to the lucrative trans-Atlantic market.

The airline is also part owner of South America’s biggest carrier, the Latam Airlines Group, after buying a 10% stake in December 2016 for just over USD600 million.

As with IAG and Latam, Qatar’s investment in Cathay Pacific is partly to diversify its assets and get a piece of the action on mainland China, given that Air China is also a co-owner of Cathay Pacific with 30%. The Swire Group remains a majority shareholder with 45%.

This purchase of Cathay Pacific equity has to be seen beyond a mere investment in a world class carrier; it’s Qatar Inc, via sovereign wealth fund Qatar Investment Authority (QIA), making a carefully crafted move into the planet’s largest aviation market.

For those who feel this latest Qatari excursion is an alliance fraught with cultural conflicts that could lead to a complex cohabitation, fret not. Qatar is the world’s richest country, now with a direct link to Air China – flag carrier of what will soon be the globe’s largest economy.

As al-Baker will probably tell you – if he’s in a good mood – money can’t buy love, but it improves your bargaining position…

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