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BA owner still likes Norwegian, sees Qatar Air leaving Oneworld

IAG also stepping up growth plans through 2023 in bid to boost profit by average of 11% annually

London

IAG SA CEO Willie Walsh dropped a couple of late bombshells at the British Airways owner's investment day on Friday, saying his company hasn't given up on buying Norwegian Air Shuttle ASA and that Qatar Airways, the UK group's biggest investor, may quit the Oneworld Alliance.

Mr Walsh said IAG's interest in Norwegian may start dimming over time after it had two bids rejected, but still sounded keen on a deal, adding that he's constantly monitoring the situation. The remarks regarding Qatar Air amount to the first independent confirmation that it was serious in a recent warning that it could walk away from Oneworld amid tensions with other members.

IAG is also stepping up growth plans through 2023 in a bid to boost profit by an average of 11 per cent annually from the previous five-year target. The upgraded forecast lends a voice of confidence from one of the biggest players in a European airline market shaken by rising fuel prices and overcapacity.

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IAG is still interested in buying the Scandinavian discounter even after being twice rebuffed, Mr Walsh tells investors. The CEO says the carrier's European network is especially attractive, and though he cautions that his company's interest "wanes over time", he still appears enthusiastic.

"I'm getting updates. There's a lot happening in that company. It's an opportunity, especially if you look at the short-haul network. But we would only do it if we thought that would generate returns that can match."

It's "highly likely" that Qatar Airways will exit the global grouping, Mr Walsh says after being quizzed on comments from Akbar Al Baker, his counterpart at the Gulf carrier, regarding a possible exit.

"He doesn't say these things without being genuine," Mr Walsh tells investors. "He is annoyed with the way some members of the Oneworld Alliance have responded to them as an alliance partner and he doesn't think that's appropriate."

Qatar and IAG will remain as close as ever and are looking at greater cooperation on shared aircraft, he adds.

The Qatar chief previously clashed with American Airlines, a Oneworld member and partner of BA on trans-Atlantic routes, over comments suggesting Gulf airlines had benefited from illegal aid, and again when Qatar sought to take a stake in the US company.

More recently Qatar Air has been frustrated by the long-standing joint venture between Oneworld's Qantas Airways and Dubai-based Emirates at a time when the UAE is among nations blockading Qatar.

IAG is planning to boost its fleet by about 130 aircraft to 716 jets by 2023, including extending the life of Boeing 747 jumbos at British Airways.

The airline group, which owns carriers including British Airways, Spain's Iberia and Ireland's Aer Lingus, outlined plans for increased investment of about 500 million euros (S$783.4 million) a year. The aim is to boost annual profit to 7.2 billion euros for 2019-2023, an 11 per cent increase from the 2018-2022 forecast. BLOOMBERG