Qatar Airways IPO this autumn would be good news for Gulf stocks
Posted on 14 June 2011 with no comments from readers
Qatar Airways may bring forward its planned 2012 initial public offering to later this year, CEO Akbar Al Baker told reporters today. A successful IPO of this size would be good news for all the bombed-out Gulf stock markets.
The airline would use the proceeds of the IPO to help finance its ambitious expansion plans. Qatar Airways has been on a buying spree in recent years. The last order was in April for $1.3 billion to add five Boeing 777s to its 97-aircraft fleet.
Fleet on order
But the airline has on order 80 Airbus A350s, 60 Boeing 787s and five Airbus A380 superjumbos. It intends to employ 11,500 new staff over the next three years and grow its fleet to 120 aircraft within that timeframe, serving 120 destinations by 2013.
However, an IPO could easily fly into turbulence. Global financial markets have been weak over the past two months and could enter a volatile patch that might leave such an IPO at risk of an air-pocket plunge in price.
On the other hand, Gulf stock markets crashed in 2006 and have shown little improvement despite a big upturn in the oil price. Saudi stocks currently trade at around a third of their peak in early 2006.
It could be that a substantial IPO proves to be a turning point. Qatar Airways’ IPO would attract global attention as one of the fastest growing global airlines and the carrier for the 2022 World Cup.
Cargolux
The airline is half-owned by the Qatar Investment Authority and is in the process of buying a 35 per cent stake in the European freight airline Cargolux. It is understood that 2011 will be its third year of profitable operation, although it does not publish its financial statements like rival Emirates Airline, owned by the Government of Dubai.
Might Emirates then follow suit with an IPO? It is not impossible but unlikely because with $1.5 billion in profits for its last fiscal year Emirates Airline is seen as too valuable to sell, and presumably likely to command an even higher valuation at a later date.
Qatar Airways is therefore likely to have the aviation IPO field to itself. All the same the first major stock market listing in the Gulf region since the global financial crisis will be closely watched and might well trigger a revival of interest in local stock markets.
