Qatar Airways closes in on Italy deal, to own minority stake in Indian airline

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DUBAI: Qatar Airways will finalize a long-negotiated agreement to buy 49 percent of Italy’s Meridiana in the coming days, and soon apply with Qatar’s sovereign wealth fund to start an Indian airline.

Qatar Airways will sign the agreement with Italy’s second biggest airline in the next “few days”, Chief Executive Akbar al-Baker told reporters in Dubai on Monday.

The airline has been negotiating to buy a stake in Meridiana for more than year, a deal that could help the loss-making Italian carrier’s ability to compete in Europe.

Meridiana would operate as a full-service carrier to destinations in Europe and beyond, al-Baker said, with the airline taking delivery of 20 Boeing 737 MAXs from the second quarter of 2018.

The 737s will come from a Qatar Airways order of Boeing jets announced last October. Al-Baker declined to say how much Qatar Airways would invest in the Italian carrier.

Meridiana, which offers flights to and from the island of Sardinia and other destinations in Italy, is owned by the Aga Khan, a businessman and spiritual leader of the Ismaili Muslims.

Qatar Airways will also apply with the Qatar Investment Authority (QIA) for a domestic Indian airline operating licence in the next few weeks, al-Baker said.

The Indian carrier would be majority owned by QIA, with Qatar Airways controlling a minority interest, he said.

Manufacturers Airbus, Boeing, Bombardier and Embraer would be welcome to bid for orders from the Indian carrier, al-Baker said.

Qatar Airways has said it plans to operate a domestic Indian carrier with around 100 jets.

The Doha-based airline also announced on Monday 12 new destinations to start in 2018, including direct flights to San Francisco in the United States.

The U.S. expansion contrasts with rival Emirates, which said this month it would cut flights on five U.S. destinations from May due to a “significant deterioration” in bookings. This followed U.S. President Donald Trump’s attempts to restrict travel from some Muslim countries, which has hit demand from the Middle East.

“We didn’t have massive declines like other carriers,” al-Baker said. “We will continue our expansion.”

The airline has seen “some decline” in passenger demand on U.S. routes, but he said this was manageable.

Qatar Airways has delayed plans to start flights to Las Vegas until the second quarter 2018, from the first quarter of that year, “mainly due to technical reasons,” al-Baker said without explaining further.

The airline, like Emirates and Etihad Airways, has faced more than two years of opposition in the United States led by major carriers American Airlines, United Airlines and Delta Air Lines .

The three U.S. carriers have lobbied the U.S. government to investigate claims the Middle East rivals have received billions of dollars in state aid, which those airlines deny.

“We create jobs, we buy American, We invest in the United States and I think we outweigh whatever job creation these three American carriers are doing,” al-Baker said.