Qatar Airways eyes 35% of Cargolux

Manila Bulletin
May 4, 2011
By ADAM SCHRECK

DUBAI, United Arab Emirates (AP) – Qatar Airways is in talks to buy at least a third of the freight airline Cargolux as part of ambitious expansion plans that would give it a bigger share of the world's rebounding cargo market, the carrier's CEO said Monday.

Akbar al-Baker declined to provide financial details of the 33 percent stake in the Luxembourg-based cargo hauler at a press conference in Dubai, but said the carriers expect to reach an agreement in the coming weeks.

Cargolux spokeswoman Martine Scheuren confirmed the talks were under way, but said they involved a slightly larger portion – 35 percent – of the carrier. Scheuren also declined to comment on the financial terms of any possible agreement.

Doha-based Qatar Airways is one of the region's fastest growing carriers, serving 100 destinations.

Al-Baker said the Mideast airline sees the deal with Cargolux Airlines International SA as a way to strengthen its bottom line without drawing management resources away from its growth strategies.

"We see there are synergies. Qatar Airways would like to expand. I've always said that we will only be interested in other airlines if they are healthy, if they are well-established (and if) they will add value to Qatar Airways,'' he said.

In its annual report released in March, Cargolux CEO Frank Reimen said the carrier was conducting an in-depth review of its business model, including potential alliances with strategic partners.

Cargolux generated $59.8 million in profit in 2010, rebounding from a steep loss the previous year as the global economy improved and demand for air cargo increased.

"We will not invest in an airline, no matter how attractive it is... that will take my management time and management resources to cure a sick individual,'' al-Baker said.

Cargolux operated 14 Boeing 747-400 freighters at the end of last year, according to its annual report. It plans to gradually overhaul its fleet by replacing existing freighters with Boeing's newer but delayed 747-8 model. It hopes to receive the first three of 13 of those planes it has on order by the end of this year.

Al-Baker also announced three new cities to Qatar's network, with flights scheduled to begin in November: Entebbe, Uganda; Baku, Azerbaijan, and Tbilisi, Georgia. An additional seven destinations announced previously are expected to be added before that.