Qatar Airways has bought a 9.99 per cent stake in British Airways’ owner International Airlines Group, in a move that underlines the state-controlled Gulf carrier’s determination to be a leading force in global aviation.

The deal shows how big European carriers are seeking to head off the strategic threat that fast-growing and well-financed Gulf airlines pose to their businesses by striking partnerships with them.

IAG is a keen proponent of these tie-ups, although Lufthansa has rejected any such arrangement. The German group — and some US airlines including Delta Air Lines — have complained they are not competing on a level playing field with Gulf carriers including Emirates Airline and Etihad Airways because they are state-controlled.

Qatar Airways’ move to become IAG’s largest shareholder highlights the emirate’s major role as a UK investor. The Qatar Investment Authority, the emirate’s sovereign wealth fund, announced on Wednesday a deal to buy Canary Wharf with Canadian group Brookfield. Qatar is also the largest shareholder in Barclays Bank and J Sainsbury, and the second-largest investor in the London Stock Exchange.

Doha-based Qatar Airways and IAG — which also owns Iberia — are now expected to forge closer working arrangements.

BA and Qatar Airways already have a code-share agreement that enables their respective passengers to fly on some of the other airline’s flights, and both groups suggested these arrangements could be expanded. This might involve some of Qatar Airways’ passengers flying on BA aircraft between Europe and North America — the UK carrier’s most prized routes.

Akbar Al Baker, Qatar Airways’ chief executive, said IAG “represents an excellent opportunity to further develop our westwards strategy”, adding he looked forward to forging a “long-term relationship”. He is close to Willie Walsh, IAG chief executive.

Qatar Airways said it may increase its shareholding in IAG over time, although non-EU airlines are banned from owning majority stakes in EU carriers.

No price was given for Qatar Airways’ stake purchase, but based on IAG’s closing share price on Thursday of 564p, 9.99 per cent of IAG was worth £1.15bn. IAG’s shares closed down 3.5 per cent at 544.5p on Friday.

Mr Walsh, who played a key role in bringing Qatar Airways into the oneworld global airline alliance led by BA in 2013, said: “We’re delighted to have Qatar Airways . . . as a long-term supportive shareholder.”

But the IAG deal raises questions about a potential conflict of interest for Qatar over its UK aviation interests because the Qatar Investment Authority has a 20 per cent stake in Heathrow airport Holdings.

Mr Al Baker sits on Heathrow’s board as a representative of the sovereign wealth fund, and therefore has a say over whether the airport should raise or cut its landing charges for airlines — an increase would benefit the hub, while a reduction would help BA and other carriers including Qatar Airways.

IAG and Qatar Airways declined to comment when asked if there was a conflict of interest for Qatar and Mr Al Baker.

But Heathrow said it “has strict governance processes in place, which ensure that any shareholder with a conflict of interest registers all potential conflicts and is excluded from any decision making where a conflict exists”.

The deal comes as IAG is negotiating with the Irish government over its €1.35bn bid to buy Aer Lingus. It is unclear whether the Qatar Airways’ stake purchase might affect IAG’s attempt to acquire the Irish carrier.

HSBC acquired Qatar Airways’ IAG shares from existing investors over an unknown period, said three people familiar with the situation. HSBC declined to comment.

Additional reporting by Arash Massoudi

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