Qatar Investment Authority may pick up 10 per cent in EADS
19 Feb 2007
Doha: State-owned Qatar Investment Authority, a $40 billion investment fund, may pick up as much as 10 per cent of European Aeronautic Defence & Space Co., Europe's largest aerospace company. According to the fund's chief executive officer, Sheikh Hamad bin Jasim bin Jaber al-Thani, the move is an attempt to diversify the emirate's holdings.
According to the CEO, the fund's interest arises from the fact that EADS, the parent of Airbus SAS, is ``under pressure'' and its shares may be undervalued after falling 18 per cent over the last year. The Sheikh made this information available, in an interview on Saturday last week in the capital city of Doha.
EADS has said that it may sell shares sometime this year to help fund development of its newest plane, the A350XWB.
Airbus has already said that it will post its first-ever loss for 2006 after a two-year delay in deliveries of its super jumbo A380 has led to cost overruns. Airbus has also been forced to pay penalties to customers.
Sheikh Hamad said that the Investment Authority has held talks with EADS officials. He however did not reveal details.
According to market estimates, the Qatar Investment Authority has assets of about $40 billion in mid-2006. The fund itself doesn't publish information on its holdings, however.
Analysts say that the Qatari government's picking up a stake could provide a lifeline to the struggling A350 program. It also makes eminent sense, since Qatar Airways is the biggest customer for the type. State-owned Qatar Airways has four A380s on order and has also pledged to buy 60 A350s. It has however yet to confirm the order.
According to EADS, the A380 delays could lead to total operating losses through 2010 of 4.8 billion euros with the cost of bringing the A380 into service shooting up to about 19 billion euros from an original projection of 12 billion euros. Airbus' A350 is set to compete with Boeing's 787 Dreamliner.