Thursday, Jan 19, 2012

--News fuels rally in European airline shares

--Airline officials decline to comment

--Analysts skeptical on likelihood of full takeover bid

(Updates with details, comments throughout.) 


 
    By Alex Delmar-Morgan 
    Of DOW JONES NEWSWIRES

DOHA (Zaywa Dow Jones)--Qatar Air said Thursday it has identified a European acquisition target as it seeks to expand outside the Persian Gulf region, news that helped send European airline stocks sharply higher.

"Qatar Airways has identified a potential acquisition target in Europe," said a spokesman for the Gulf carrier, declining to say which country or airline the deal involves.

The spokesman was confirming remarks made earlier Thursday by Qatar Airways Chief Executive Akbar Al Baker.

Takeover speculation has bubbled away in recent weeks in Europe's airline sector, as companies grapple with high fuel costs and slowing traffic growth as much of the region faces recession.

Though it is not clear which airline Qatar has in mind, or whether the investment would involve taking a minority or majority stake, Al Baker's comments contributed to a surge in airlines share prices amid a broad rally in European stocks Thursday.

Shares in Franco-Dutch airline Air France-KLM (AF.FR) rose 9.3%, shares in Irish flag carrier Aer Lingus (EIL1.DB) rose 9.1%, while shares in Scandinavian carrier SAS AB (SAS.SK) rose 1.1%. Shares in U.K.-based no-frills carrier easyJet PLC were up 1.7%.

A spokesman for Air France-KLM, 15.7%-owned by the French government declined to comment. So did officials at SAS AB, controlled by the governments of Denmark, Norway and Sweden, and Aer Lingus, whose major shareholders include the Irish government.

Analysts say political and regulatory considerations would make a full takeover of a European carrier by the state-owned Qatar Air unlikely.

"Air France share price hike is not necessarily linked to Qatar Airlines' plans. ... and we have to bear in mind that a non European company could not buy more than 49% of Air France's shares for regulatory reasons," said an analyst at European bank in London.

A Paris-based analyst said "it would be difficult for Qatar Airways to buy a European airline, as it would jeopardize all the traffic rights the target company owns."

"Traffic rights are negotiated at state level, or by the European Union with other countries. The traffic rights of a company owned by a Qatari investor would be seen as Qatari rights, not French or European rights," the analyst said.

Among unlisted airlines that Qatar might invest in are Portugal's national airline TAP, which the government is trying to privatize, and Spanair, a small Spanish carrier, which is up for sale.

-By Alex Delmar-Morgan, Dow Jones Newswires; +974 6659 9818; alex.delmar-morgan@dowjones.com

--David Pearson, Thomas Varela, Kaveri Niththyananthan, and Christina Zander contributed to this article.

(END) Dow Jones Newswires

19-01-12 1823GMT