Qatar’s national carrier Qatar Airways and LATAM Airlines, Latin America’s leading airline group, both members of the oneworld alliance, have entered into a subscription agreement providing for Qatar Airways to acquire up to 10% of LATAM’s total shares, which will be acquired in connection with a capital increase.
As provided for in the subscription agreement, the LATAM Airlines Group will hold an extraordinary shareholders meeting no later than September 2 to propose a capital increase in the amount of $613mn through the issuance of new shares at a price of $10 a share.
The announcement was made at the Farnborough International Air Show in England, by CEOs of both the airlines, Akbar al-Baker and Enrique Cueto.
Al-Baker said: “LATAM represents an exciting opportunity to invest and support the development of our long-term relationship.
As a leading airline in Latin America, and key member of oneworld, this investment provides potential opportunities for Qatar Airways’ global network, alongside
our successful investment in IAG.”
“We are proud to announce Qatar Airways as a new shareholder of LATAM, reaffirming our bond as existing members of the oneworld alliance,” said Cueto.
This investment recognises LATAM’s achievements and supports our project for the future. In addition to strengthening our financial position, it will allow us to explore new opportunities for connectivity with Asia and the Middle East, as well as other potential areas of co-operation,” Cueto added.
The companies expect the transaction to be completed within the fourth quarter of this year.
Qatar Airways was advised by HSBC Bank, Weil, Gotshall & Manges and Carey, while LATAM Airlines Group was advised by JP Morgan, Claro & Cía, Sullivan & Cromwell.
Shares in LATAM hit their highest level in over a year, up as much as 25% before paring gains to trade up 14% by 11am ET (1600 GMT) at 5,180 pesos in Santiago and $7.90 in the United States..
Latin American airlines have struggled as a global commodities downturn has sapped growth and weakened currencies, but the region’s growing middle class and untapped potential still make it an attractive target for foreign carriers.
Qatar Airways is one of the fastest growing airlines operating one of the youngest fleets in the world.
Now in its 19th year of operations, Qatar Airways has a modern fleet of 186 aircraft flying to more than 150 key business and leisure destinations across six continents.
Qatar Airways may take a significant stake in Italy’s Meridiana airline, a source the Reuters news agency at Farnborough yesterday. Qatar Airways said in June it had reached an impasse in negotiations to buy 49% of the Italian airline, due to disagreements over working conditions.
Cueto (left) with al-Baker following the announcement in Farnborough that Qatar Airways will acquire up to 10% of LATAM’s total shares before the year-end.