Blog Coverage Qatar Airways Acquires 10 Percent Stake in the Chile-Based Carrier LATAM

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LONDON, UK / ACCESSWIRE / December 30, 2016 / Active Wall St. blog coverage looks at the headline from LATAM Airlines Group S. A. (NYSE: LFL). Qatar Airways announced on December 28, 2016, that through its wholly owned subsidiary, Qatar Airways Investments (UK) Ltd (“Qatar”), it has completed the acquisition of 10% of LATAM Airlines Group S.A. (NYSE: LFL). According to the terms of the agreement, Qatar acquired 60,837,452 shares of the Latin American airline group. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

One of LATAM Airlines Group’s competitors within the Regional Airlines space, Southwest Airlines Co. (NYSE: LUV), is estimated to report earnings on January 19, 2017. AWS will be initiating a research report on Southwest Airlines in the coming days.

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About the Companies

Qatar Airways, based at Doha Hamad International Airport, is wholly owned by the Qatari government. It is one of the largest network airlines of the Middle East and serves 140 destinations across the world. The firm boasts of a 20% stake in International Airlines Group (IAG), the recently acquired 10% stake in LATAM, and the reported plans to acquire 49% stake in Meridiana, the Italian Airlines.

LATAM Airlines, a Chile-based air transport company serves more than 45 international destinations (excluding domestic destinations) across 23 countries using its average total fleet of over 112 aircraft. Dealing primarily in passenger and cargo air transportation, LATAM transports cargo through approximately 315 passenger aircraft and 11 freighters.

Breaking down the merger

LATAM, currently the largest airline in Latin America, is a product of the agreement between LAN, based in Chile, and Brazil’s TAM. LATAM lost $219 million in 2015 as Brazil faced a recession.

This agreement would grant the much-needed cash inflows for the Latin American flyer. LATAM offered 61,316,424 new shares at $10 per share, where, the offer ended on December 23, 2016, in which Qatar Airways subscribed shares of LATAM through its wholly-owned subsidiary Qatar Airways Investments. An additional 12,140 shares were subscribed by minority shareholders of LATAM.

Qatar Airways Investment Spree

This investment in the Chile-based flyer was first announced on July 12, 2016, as the firm planned several expansion drives in other carriers. Chief Executive, Akbar Al Baker, Qatar Airways stated that the firm would invest $613 million in the Latin American carrier which has been hit by an economic slowdown and a decline in local demand.

LATAM views this collaboration as a path to connect South America with the Middle East and Asia, which would eventually, strengthen its financial stance.

Qatar Airways fruitfully exploited the opportunity created by the Brexit event, where Britain decided to leave the European Union. The world class airline Company acquired a 20.01% stake, on August 01, 2016, in British Airways owner, IAG, up from the previous declaration of 15.67%. Qatar Airways additionally owns stakes in Aer Lingus, the Ireland’s flag carrier, and the Spanish Airlines, Iberia, and Vueling. Qatar Airways revealed a 9.99% stake in IAG in January 2015, last year. However, the stake improved considerably where the investment was raised 3 times in less than 3 months.

Stock Performance

At the closing bell, on Thursday, December 29, 2016, LATAM Airlines Group’s stock slipped 1.66%, ending the trading session at $8.28. A total volume of 138.84 thousand shares were traded at the end of the day. In the last six months and previous twelve months, shares of the company have rallied 25.45% and 55.93%, respectively. Moreover, the stock soared 53.62% since the start of the year. The company’s shares currently have a market cap of $5.18 billion.

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