Qatar Airways Buys 5% Stake In China Southern (And Trolls American Airlines In The Process)

Filed Under: China Southern, Qatar

Hah, well this sure is… amusing.

Qatar Airways has just announced that they’ve acquired a roughly 5% stake in China Southern. Qatar Airways says this was an on-market purchase of certain A shares and H shares.

Here’s what Qatar Airways CEO Akbar Al Baker had to say about this investment:

“China Southern Airlines is one of the most prestigious airlines in the Chinese domestic market and an important market player in the world, with massive potential for cooperation in the future. Given the complementary strengths and resources of each of China Southern Airlines and Qatar Airways, there are opportunities for us to work together and build a long term relationship in ways that would bring benefits to customers of both airlines. The investment is a clear demonstration of Qatar Airways’ continued commitment to connecting travellers across all corners of the world in a way that is meaningful and convenient. Qatar Airways very much looks forward to the opportunity to deepen our working relationship with this great airline and further enhance the travel opportunities across the globe.”

Qatar Airways likes investing in other airlines

This isn’t Qatar Airways’ first investment in another airline. The airline already owns:

  • 20% of IAG (the parent company of British Airways, Iberia, and Aer Lingus
  • 10% of LATAM
  • 49% of Air Italy
  • 9.99% of Cathay Pacific

So as such it isn’t unusual that Qatar Airways is investing in yet another airline, and certainly if you’re looking to invest in the future of aviation, mainland China is a good place to do so.

What makes Qatar’s investment in China Southern interesting

It goes without saying that there’s some bad blood between Qatar Airways and American Airlines. In addition to the “big three” US carriers constantly bullying the Gulf carriers, Qatar Airways has also tried to buy a stake in American.

In mid-2017, Qatar Airways announced their intention to buy up to a 10% stake in American Airlines.

Not surprisingly, American’s CEO claimed he wasn’t “particularly excited” about this news, and described the news for many as “puzzling, at best, and concerning, at worst.” So Qatar Airways decided not to move forward with this investment, simply saying that “the investment no longer meets [their] objectives.”

In early 2017, American invested in China Southern. It seems to me like the primary motivation for this investment was to create the groundwork for the two airlines to cooperate further.

American doesn’t have a mainland Chinese airline partner, and since then China Southern has left SkyTeam, and the airlines have announced reciprocal benefits and codeshare agreements. It sure looks like China Southern might join oneworld at some point.

So it’s pretty funny to now see Qatar Airways come in and say “we want to cooperate with China Southern as well.”

What’s interesting is that in the past when Qatar Airways has invested in other airlines, they haven’t been as explicit about saying they want more cooperation. They typically simply said they thought it was a sound investment. In this instance, Al Baker is making it abundantly clear that he wants more cooperation between the two airlines.

Surely that’s not a coincidence, and I can’t help but feel like Al Baker is low key trolling Doug Parker.

Bottom line

It goes without saying that China is a huge, growing, aviation market, and Qatar Airways is smart to look for expansion there.

However, I can’t help but feel like there’s at least a little bit of trolling going on here, and I sort of love it. Qatar Airways wanted to buy a stake in American Airlines. They didn’t want it. American invested in China Southern to get closer cooperation. Now Qatar wants to invest in China Southern to get closer cooperation.

All the while Qatar Airways is rumored to be leaving oneworld and China Southern is rumored to be joining oneworld.

They don’t even make drama this good on Real Housewives!

What do you make of Qatar Airways’ investment in China Southern? Is it completely unrelated to Al Baker’s dislike for Parker, or is there at least a little bit of nose-thumbing going on here?

  1. They’re enormous airlines, not teenage girls… I don’t quite see why Qatar and American cooperating with the same airline it’s going to remotely irritate American anyway – they already do with other carriers.

    If this does somehow annoy American then I’m sure it will make Baker happy, but I highly doubt they make large financial investments just to “troll” others. Not least because they could have done so far better by buying American shares.

  2. Nice to see your inner Real Housewife in action after a long time! I believe QR and CZ will make for good partners in Oneworld (when CZ joins)—no kidding here. But I don’t know how CX, AA and QF will respond.

  3. @ Callum — We’re talking about an airline where the CEO flies to certain destinations and flies certain planes to certain destinations to “rub salt in the wound” of competitors. You’re giving them too much credit. 😉

  4. @Lucky QR owns 49% of Air Italy and not 45%.

    I find this a very interesting development. Qatar’s shares are apparently worth more (more power) than American’s – and they made sure to make this known by mentioning ‘certain A and H shares’.
    What’s interests me even more is how the relationship between Cathay and China Southern will develop. There’s got to be some interesting drama there….

  5. There is some interesting details behind this. On Dec 28, QR purchased 8600 A share and 6000 H share which is 0.0001% of CZ. Before that QR holds 4.9999% of CZ. So I guess QR prepared for this low key trolling long time ago lol.

  6. Not only is QR not going to leave Oneworld, they are slowly preparing to run the alliance the way they want it to be run. the CZ purchase is a very small piece in the puzzle, but a meaningful one. More interesting, it looks to me like AAB is also preparing to make it impossible for QR to be thrown out of Oneworld. A possibility is that the predatory QR low fares out of the US and/or the Fifth Freedom QR flights are finally on their way in.

  7. Hopefully he can make those China Southern flight attendants look as good as the kind ME3 airlines use. I’m disgusted by the American carrier attendants

  8. The Real Housewives of OneWorld is how we should now refer to these 3 airlines LOL.

    I think QR and AA will make up soon and AA will allow them to buy a stake.

  9. Though unlikely to happen , it that would really be entertaining if QR gained a controlling interest in any of the big 3 US airlines . Imagine AAB trolling in overdrive then .

  10. @Lucky – I think you’re not giving them enough credit… As I said, if they wanted to waste millions and annoy AA then they’d be better off buying the stake in AA that they originally wanted. It’s a publicly traded company. They can raise public objections, they can’t deny it.

    While I’m sure they’d revel at any chance to annoy AA, I doubt this is anything other than a normal business decision. And as I said before, I doubt AA are that annoyed by this.

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