Qatar Airways is buying into the one market no major airline can ignore: mainland China.
The state-owned Gulf airline said Wednesday that it has acquired 5% of China Southern Airlines (ZNH), the country's largest carrier. US rivals American Airlines (AAL) and Delta (DAL) already have stakes in China Southern and China Eastern (CEA), respectively.
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China Southern Airlines
Akbar Al Baker
Qatar Airways said it acquired its stake by purchasing China Southern shares on the Hong Kong and Shanghai stock markets. It's the first major investment in mainland China by Qatar Airways.
Akbar Al Baker, the CEO of Qatar Airways, said the investment offered "massive potential."
"China Southern Airlines is one of the most prestigious airlines in the Chinese domestic market and an important market player in the world," Al Baker said in a statement.
China takes off
Air travel is growing rapidly in China. The International Air Transport Association expects the country to overtake the United States as the world's largest aviation market by 2023.
The surge in air travel is fueled in large part by middle class Chinese who are spending billions on domestic and foreign vacations.
Boeing (BA) expects Chinese airlines to purchase 7,690 new airplanes over the next 20 years, at a combined value of $1.2 trillion. Boeing estimates that 75% of the new planes will be single aisle aircraft.
Qatar Airways has invested in a number of international airlines in recent years.
It owns 20% of International Airlines Group (ICAGY), the parent company of British Airways, as well as 10% stakes in Hong Kong carrier Cathay Pacific (CPCAY) and LATAM Airlines Group (LTM). It owns 49% of Air Italy.
The investments took on added importance after Qatar Airways was banned from some Middle East destinations following a breakdown of relations with neighbors such as Saudi Arabia and the United Arab Emirates in 2017.
Qatar Airlines operates across 1,000 airports in more than 150 countries, with 14,250 daily departures. China Southern did not respond to a request for comment on Wednesday.
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