DUBAI: Qatar Airways agreed on Thursday to buy a 49 per cent stake in Meridiana, bringing months of negotiations to a close and likely saving the Italian airline from financial collapse.
Qatar Airways has signed a “contribution and shareholders agreement” with Meridiana parent company Alisarda at the Farnborough Airshow in the United Kingdom, the Doha-based carrier said on its website, without disclosing the value of the deal.
“This agreement sets the path to progress our work towards a strong resolution that benefits both the staff and passengers who travel with Meridiana fly,” Qatar Airways group chief executive Akbar Al Baker said.
The agreement is “subject to the fulfilment of certain conditions” and expected to close in “early October,” Qatar Airways said.
Negotiations had been carrying on for months with Qatar Airways signing a preliminary agreement back in February. However, on June 3 Al Baker threatened to walk away from the deal if Italian unions continued to push back on demands to tie any stake purchase with job cuts.
The Italian government said in February that Qatar Airways was “the only option to relaunch and strengthen” the Sardinia-based Meridiana, who has not released financials since it reported a loss in 2013 and is under a government-sponsored restructuring plan.
Though it is Italy’s second largest carrier, Meridiana is a small airline with a limited network to cities in Europe, Africa and some long-haul destinations and a fleet of dated aircraft that include McDonnell Douglas MD-80s and first-generation Boeing 737s.
“The Italian market is one of Europe’s largest, so [a stake in Meridiana] will add considerable traffic feed potential onto its Italy -Doha services,” John Strickland, aviation expert and director of UK-based JLS Consulting, told Gulf News by email.
The Qatar Airways stake purchase is likely to include a capital injection and access to the Doha-airline’s order book, Al Baker previously said.
Qatar Airways’ bid for Meridiana has drawn comparisons with fellow Gulf carrier Etihad Airways which owns stakes in seven airlines including Italy’s largest carrier Alitalia.
“The potential gains between Qatar and Meridiana are far smaller than between Etihad and Alitalia, largely a result of Meridiana being so small,” Will Horton, senior analyst at CAPA – Centre for Aviation, told Gulf News by email. “Qatar will not be required to input as much work into Meridiana as Etihad into Alitalia.”
The agreement by state-owned Qatar Airways follows a series of investments by the Qatar government in Sardinia, Meridiana’s base, including a 2013 commitment to invest €1 billion in the Italian island’s tourism industry.
Qatar Airways announced on July 11 a $445 million profit for the fiscal year ending March 31 and on July 12 said that it had agreed to buy up to 10 per cent stake of South America’s largest airline LATAM. It also owns 15.67 per cent of IAG, British Airway’s parent company.
While Qatar Airway did not divulge the value of the Meridiana stake purchase, earlier this year, CAPA – Centre for Aviation had estimated it would “surely be a sum in the millions of dollars.” Horton said it would be a “minor deal.”